Foreign Airlines Cut Ticket Sales On Nigerian Routes
… unable to repatriate more than $ 144 million in revenue because CBN is rationing forex
As the naira crisis continues to worsen, foreign carriers operating in Nigeria have started to reduce the total number of tickets they sell on Nigerian routes amid growing dollar scarcity that has made repatriation difficult. billions of naira in proceeds from ticket sales to their overseas headquarters.
The development will result in a significant reduction in total ticket sales of around N 1 billion that more than 25 foreign carriers make on Nigerian routes.
It comes as the International Air Transport Association – the global body of international carriers – said foreign airlines operating in Nigeria had failed to repatriate around $ 144 million (N60 billion ) of tickets sold in their home country, calling on the federal government to make forex available to carriers to do so.
Already the UK mega-carrier British Airways, which sells billions of naira in ticket sales to Nigerians each year, has issued a notice to travel agents advising them that it will curtail the inventory of tickets in Nigeria by due to foreign exchange problems in the country.
BA’s advice to travel agents, obtained exclusively by Sunday PUNCH, was titled “BA Notification to Control Stocks Due to Unstable Exchange Rate”.
The advisory read: “I wish to inform you of British Airways’ intention to control the inventory of its global distribution system by removing all lower classes from GDS, leaving only the classes below for sale and on issue. and we all know the cost implications .: Economy Y, Premium Economy W; Business Class J; First Class F. This has become necessary due to the fluctuation and instability of the exchange rate in Nigeria. hereby implore to pay and issue all pending BA reservations with you before this takes effect ”
Travel agents who spoke to Sunday PUNCH said the advisory, which came about a week ago, may soon go into effect according to BA officials in Nigeria.
The development means that more than 65% of the total number of economy class, business class and first class ticket categories available for sale will be deleted by BA as soon as the notice takes effect.
âWe are really surprised by this decision. BA is doing what other airlines have tactically done. BA officials told us that they cannot repatriate their ticket sales and that is affecting their operations. Right now, they want to reduce the total number of tickets they sell in Nigeria with this move. Until the CBN makes dollars available to airlines to repatriate the proceeds from the sale of their tickets, things could continue to get worse, âsaid the managing director of a major travel agency. Sunday PUNCH on condition of anonymity in order to avoid possible negative reactions.
Meanwhile, the results showed Virgin Atlantic technically reduced its ticket inventory by offering cheaper dollar ticket classes.
According to travel operators, this will force potential buyers to use tickets available in dollars, instead of those available in naira.
Already, other carriers in the Middle East and Africa have started selling dollar tickets by encouraging tour operators to buy in dollars.
In addition, it has been learned that potential individual buyers who frequent airline headquarters are encouraged to purchase dollar tickets in others to obtain cheaper fares.
Travel operators said most foreign airlines require passengers, who frequent them directly through their head office, to pay into their home accounts.
Meanwhile, the Central Bank of Nigeria has announced that it will launch an investigation into reports that some foreign carriers have started selling foreign currency banknotes instead of the naira.
CBN spokesman Osita Nwanisobi said the umbrella bank will investigate and take appropriate action if a carrier is found guilty.
“The CBN will investigate these reports and take appropriate action, although we have yet to obtain official reports on them.”
But IATA, the global airline body, had called on Nigeria and other countries with exchange rate problems to guarantee the availability of forex to foreign carriers to repatriate the proceeds from the sale of their tickets.
IATA urged governments to abide by international agreements and treaty obligations to allow airlines to repatriate nearly $ 1 billion in stranded funds from ticket sales, cargo space and other activities .
IATA chief executive Willie Walsh said its member airlines were facing challenges in Nigeria and a few other countries.
Walsh said, âGovernments are preventing the repatriation of nearly $ 1 billion in airline revenues. This violates international conventions and could slow the recovery of travel and tourism in affected markets as the airline industry struggles to recover from the COVID-19 crisis. Airlines will not be able to provide reliable connectivity if they cannot rely on local revenues to support their operations. This is why it is essential that all governments prioritize ensuring that funds can be repatriated effectively. Now is not the time to score an âown goalâ by jeopardizing vital air connectivity. ”
According to IATA, around $ 963 million in air funds is stranded for repatriation in nearly 20 countries.
âFour countries: Bangladesh ($ 146.1 million), Lebanon ($ 175.5 million), Nigeria ($ 143.8 million) and Zimbabwe ($ 142.7 million), represent more by 60% of that total, although there has been positive progress in reducing funds stranded in Bangladesh and Zimbabwe in recent times, âIATA said.
âWe encourage governments to work with industry to resolve issues that prevent airlines from repatriating funds. This will allow aviation to provide the connectivity necessary to maintain jobs and energize economies as they recover from COVID-19, âWalsh said.
Meanwhile, the Association of Foreign Airlines in Nigeria, the umbrella body for foreign carriers operating in the country, said the carriers need dollars to maintain their planes and run their operations.
As such, he said there was a need for the CBN to provide dollars to its members flying in Nigeria.
AFARN President Kingsley Nwokeoma said: âAs we all know, the industry, like all other international sectors, is dollar driven. Inconsistent government policies have prompted some foreign airlines to start selling tickets in US dollars by some means as a survival option.
âIt is worrying that airlines in Nigeria cannot repatriate around $ 144 million. Imagine if this situation is applicable to other countries, the industry will be in danger. The government must know that without this repatriation, the airlines will not be able to finance maintenance, operations, aircraft purchases, salaries and other commitments. The government must seriously look into the matter and find a solution because it is embarrassing for a country like Nigeria. “
When contacted, Virgin Atlantic denied selling tickets in local and foreign currencies.
A statement from the Virgin spokesperson said: âThe allegations that Virgin Atlantic is demanding payment in US dollars are false. Our business partners in Nigeria are extremely important to us and we work closely with them, offering a range of fares available in Nigerian naira. However, if our business customers wish to pay in other currencies including British Pound or US Dollar, we can also live with that. ”
Some of the foreign airlines flying to Nigeria are British Airways, Virgin Atlantic, Air France, KLM, Lufthansa Airlines, Turkish Airlines, Emirates Airlines, Qatar Airways, Etihad Airlines, and Delta Airlines.
Others include Kenya Airways, Ethiopian Airlines, RwandAir, Egypt Air, Middle East Airlines, Africa World Airlines, and South Africa Airways.
In 2006, when world oil prices fell and the CBN was unable to sell enough foreign exchange to foreign airlines to repatriate billions of naira in ticket revenue, a number of foreign airlines were shut down. hard hit, many resorting to dollar ticket sales. . The move was frowned upon by the CBN.
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