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How timely funds release by CBN calmed frayed nerves in aviation sector 

By Wole Oyebade
28 August 2022   |   3:52 am
The Central Bank of Nigeria’s (CBN) release of $265 million out of foreign carriers’ funds that are stranded in the country, effectively calmed frayed nerves in the aviation industry...

Airplane. Photo: Getty Image

The Central Bank of Nigeria’s (CBN) release of $265 million out of foreign carriers’ funds that are stranded in the country, effectively calmed frayed nerves in the aviation industry.

   
Importantly, it also doused mounting tension over feelers that more foreign airlines were preparing to announce withdrawal plans from Nigerian routes, coupled with galloping spikes in the prices of international airfares.
 
The aviation sector has lately been apprehensive over foreign airlines’ stranded funds, estimated to have reached $464 million as of July. Emirates Airlines, among others, had notified the government and its customers of plans to halt Nigerian operations, effective September 1, 2022.
 
Exits of foreign carriers that account for 80 per cent of commercial aviation earnings to the Gross Domestic Product (GDP) would hobble the projected growth of the air transport sector and cost Nigeria $1.36 billion, or N567.12 billion (at $/N417) yearly.
 
However, the apex bank late Friday announced the release of $265 million to the airlines to settle outstanding ticket sales out of the $464 million trapped fund.
 
An analysis of the figure showed that the sum of $230 million was released as special FX intervention, while $35 million was released through Retail Secondary Market Intervention Sales (SMIS) auction.
 
The Director, Corporate Communications Department at the CBN, Osita Nwanisobi, said Governor Godwin Emefiele and his team were concerned about the development, what it portends for the sector, travellers as well as the country in the comity of nations.
  
The sales representative of one of the airlines that had planned to also announce its withdrawal plan next week said that the release and attendant pullback were timely.
 
“Foreign airlines threatening to halt operations mean so much for the airlines and we the workers, as much as it does to our customers and the country at large. Mere talks about the likelihood of exits having doubled available ticket prices on some airlines because operators keep mopping away the lower layers of fares from the Nigerian market. The uncertainty was palpable.
 
“But with the latest intervention, we can all look forward to the best. Certainly, airlines will review their options and make positive adjustments in the days ahead,” the representative assured.
 
The Chairman of the Airline Passenger Joint Committee (APJC) of the International Air Transport Association (IATA), Bankole Bernard, yesterday, said the intervention was a welcome development and much appreciated by the entire industry.
 
Bernard, however, regretted that the release or assurance to that effect did not come earlier to manage the situation.
 
He said: “We had seen the government with a posture that seems to call the bluff of everyone even when the reputation of the entire country is at stake. A better engagement with the trade partners and words of assurance could have solved a lot of problems and saved our country this avoidable embarrassing situation,” he said.
  
Secretary General of the Aviation Safety Round Table Initiative (ASRTI), Group Capt. John Ojikutu (rtd), reckoned that the Federal Government did the needful to it from international condemnation.
 
Ojikutu said that the money is Nigeria’s debt to the foreign airlines and its obligations to the Bilateral Air Service Agreements (BASAs) and IATA.
 
“What has happened to these funds locked up in our country is not different from how Nigeria Airways was excised out of IATA commercial exchange in the early 90s when it could not pay the monies owed to some airlines.

“Obligations in international commercial aviation are done or returned in dollars. These airlines pay our public and private service providers in dollars, why would they not take back home in dollars their sales in naira? It is also a volte-face by those in government administration who cannot account for the dollars earned in commercial aviation from these airlines,” Ojikutu said.
 
IATA, the clearing house for over 280 world airlines, had urged the Federal Government to ensure foreign airlines repatriate their funds in the interest of Nigerian aviation. The body had expressed disappointment that the amount of airline money blocked by the Nigerian government grew to $464 million in July, warning that the development would hurt Nigerian travellers and the economy more.