The International Air Transport Association (IATA) recently sent a worrisome signal that some foreign airlines operating in five countries, including Nigeria may be forced to withdraw their services in view of their trapped revenues in these countries. Currently, Nigeria is said to owe the foreign airlines up to the tune of $591 million.
Other countries that are likely to be affected by the measure and the amount they owe the airlines include: Venezuela, $3.780 billion, Sudan, $360 million, Egypt, $291 million, and Angola, $237 million. The top two countries blocking the repatriation of airline funds are Venezuela and Nigeria. Altogether, the total trapped money in these five countries is put at about $5.1 billion.
The outgoing Director General and CEO of IATA, Tony Tyler, who revealed this, urged the governments of the five concerned countries to urgently address the problem of airline blocked money. The IATA boss also asked the governments to respect international agreements that oblige them to ensure that airlines repatriate their revenues.
Tyler explained that air connectivity is vital to all economies because the airline industry is a competitive business operating on thin margins. He argued that the efficient repatriation of revenues is critical for airlines to be in a position to play their role as a catalyst for economic activity. Tyler also pointed out that it is not reasonable to expect airlines to invest and operate in nations where they cannot efficiently collect payment for their services.
Some of these countries are having serious economic challenges particularly with a fall in oil revenues. In Venezuela, currency controls of 2003 gave approval for repatriation of funds, but by 2013, approvals did not keep pace with funds that are to be repatriated. The matter became worse in 2015 when only one request for repatriation of funds was approved, while only one request has so far being granted this year.
In Nigeria, repatriation issue came up in 2015 as demand for foreign currency in the country outpaced supply and the banks were reportedly unable to service currency repatriation. While this situation is regrettable, it is also interesting to know that the Nigerian authorities are in dialogue with the airlines and industry stakeholders to resolve the issue amicably.
It will be recalled that this development prompted the United States carrier, United Airlines, to give end of this month as its exit date from Nigeria. Spanish national carrier, Iberia Plc, has also stopped flights to Nigeria. There are indications that some other foreign airlines may toe such line if nothing is done quickly to remedy the situation.
We urge the Nigerian authorities to resolve this problem with the affected airlines forthwith so that they can continue their business in the country. The exit of the airlines from the country will not augur well for the economy. Let us frontally address the increasing shortage of foreign exchange in the country.
Nigeria should diversify its economy, produce and export more goods outside crude oil. There is no doubt that Nigeria needs robust air connectivity which may be hampered by airlines’ difficulty in repatriating funds. Apart from being an economic enabler, strong air connectivity generates considerable economic and social benefits that struggling economies needs.
There is no way Nigeria can afford to be cut off from the outside world. Aviation is an international industry. Let us abide by its rules. Therefore, let government expedite action on whatever it is doing to enable the airlines repatriate their trapped funds. We say this because their exit will invariably lead to loss of jobs and income. It will negatively affect our image before other nations. We think that settling this issue will improve the ease of doing business in the country.
