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Stuck fund crisis costs aviation $500m loss, 70% ticket sales

By Wole Oyebade
08 February 2023   |   3:16 am
Foreign airlines’ stuck fund crisis that is rocking the air transport sector has cost aviation, and the economy at large, about $500 million revenue loss in 2022.

British Airways planes. President of National Association of Nigerian Travel Agencies (NANTA), Susan Akporiaye believes stuck fund crisis is rocking the air transport sector.

•Travel agencies urge government to check foreign airlines exploitation

Foreign airlines’ stuck fund crisis that is rocking the air transport sector has cost aviation, and the economy at large, about $500 million revenue loss in 2022.

The estimated loss, courtesy of the National Association of Nigerian Travel Agencies (NANTA), was due to about 70 per cent ticket sales that the Nigerian sector lost to other countries with more affordable fare pricing.

Recall that for the better part of last year, air transport sector was saddled with the foreign exchange liquidity crisis, culminating in foreign airlines unable to repatriate funds from tickets sold in naira.

Despite $265 million intervention by the Central Bank of Nigeria (CBN) in August, the stuck fund balance in Nigeria was pegged at $551 million as at November.

The development has led to foreign airlines withdrawing affordable layers of airfares, leaving the air travellers to pay as much as 200 per cent for tickets.

President of NANTA, Susan Akopriaye, at a media briefing in Lagos, said the industry lost between $450 million and $500 million revenue in 2022, compared to 2021 that earned the sector $1.5 billion in ticket sales.

Akporiaye noted that over 750,000 out of 2.4 million aviation-related jobs were also lost due to the stuck fund crisis that has been as harrowing for travel agencies as it is for the air travelling public.

Specifically, she said the downturn was on account of “obnoxious, yet unjustifiable” fare pricing regime that the foreign carriers have activated and still unchecked by the government.

“The consequence is that a lot of air travellers are now sourcing for affordable tickets in neighbouring countries and overseas. This means that they are boycotting travel agencies in Nigeria, not paying the five per cent passenger charges to Nigeria and depriving the economy of revenue, yet they are Nigerians flying out of Nigeria. On account of that, only 30 per cent of the tickets used last year were bought in Nigeria, the rest are from outside. The only finger gaining in the value chain is the foreign airlines, and a reason the government should be worried,” Akporiaye said.

She added that it is only in Nigeria that foreign airlines are demanding as much as $2000 for an economy class ticket, “which is a rip-off on Nigerians.”

“The problem is that all low-fare inventories of the airlines have been deliberately blocked to our members and to this market. This means that Nigeria is at a disadvantage since the airlines seem to have mastered the art of exploiting the forex issue to their advantage.

“Agencies are now forced to fold, leave the country or try to use other neighbouring countries to sell to their customers. The Nigerian travel market continues to be at the losing end with the airlines being indifferent to the plight of travellers and as a body, we are left with no option than to call the government to be more strategic, deliberate and direct in resolving this multifaceted dilemma,” she said.

First Vice President of the association, Yinka Folami, added that though NANTA wanted the airlines to have their funds repatriated, the government should take more than a passing interest in the crisis and play its role as a government.

“We hold the stand that government still retains the responsibility to commit to agreements with airlines to protect the sector and call airlines to order when there are obvious excesses from the airlines that puts the entire industry in jeopardy; because the current fare structure and practices are exploitative to the Nigerian traveller as well as agencies who provide a reasonable noble of jobs for our great nation. This heavy cost to the Nigerian traveller is unnecessary. We strongly request the airlines to open inventories to tally with what obtains in similar markets with trapped funds,” Folami said.

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