The International Air Transport Association (IATA) has indicated its inability to engage in discussions with the Governor of the Central Bank of Nigeria regarding the issue of $790 million in trapped ticket revenue owed to foreign airlines.
In a media presentation at the IATA Global Media Day in Geneva, Switzerland, on Thursday, IATA Regional Vice President for Africa & Middle East, Kamil Alawadhi, issued a warning that certain foreign airlines may consider withdrawing from the Nigerian markets if no resolution is reached concerning the stranded ticket revenue.
Alawadhi also disclosed that despite the subpar infrastructure at Lagos and Abuja airports, they have been ranked as the most expensive gateways in the region.
Highlighting the severity of the issue, he emphasized that Nigeria currently holds the highest amount of blocked funds among countries, totaling $792 million. This surpasses other nations such as Egypt ($348 million), Algeria ($199 million), AFI zone ($183 million), and Ethiopia ($128 million). While Ethiopia has implemented a strategy to address its debt, Alawadhi noted that Nigeria has yet to take any action in this regard.
Al-Awadhi said, “Ethiopia is seeking a way to resolve this issue even though the blocked fund is rising. The first step for us to solve these blocked funds is for both parties to engage. If parties don’t engage, it is very difficult to move forward. I have not been able to engage with Nigeria’s CBN Governor.
He said he would engage with me when he had a solution. He is not promising but I have engaged with the Aviation Minister who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter.”
“The airlines in Africa are owed $34 million. That $34 million is blocked. Depreciation has set in on the money. They have already lost $10 million because of depreciation. That is not fair for the airlines because they have paid all the dues to the operators of the airports. Every due has been paid for. They carry Nigerian officials on these flights and they can’t get their money.
On the state of aviation in Nigeria, the IATA boss said with 25 per cent interest on loans, high airport taxes and insurance premiums which it said was six times more than anywhere in the world, it would be difficult for Nigerian airlines to make profit.
According to Al-Awadhi, any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines.
He said, “Every airline has its challenges and it depends on where it operates. To answer this question, I will use Nigeria as an example. Nigeria has two most expensive airports; their fuel is higher than elsewhere in the world, and insurance is six times more expensive than anywhere else in the world.”
“The interest on loans is 25%. It is ridiculous. It is the highest interest I have ever seen. When you set up these airlines, you are already disadvantaged. Any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines. You can see why it is difficult for African airlines to make profit.
He added, “IATA is identifying why these costs are high and we are trying to tackle them one by one by seeing how they can reduce the costs. We are expecting that the operating costs of the African airlines will be lowered and they can become profitable”, said Al-Awadhi.
IATA is identifying why these costs are high and we are trying to tackle them one by one by seeing how they can reduce the costs, hoping that the operating costs of the African airlines will be lowered and they can become profitable. “