Aviation Industry in danger as FGN continues to default in payments

The Central Bank of Nigeria (CBN) on Tuesday said it has paid additional $64.44 million of the trapped funds of foreign airlines in the country, thereby bringing the total amount of money paid in recent time to $136.73 million.


Sponsored Images

However, the foreign airlines said they were yet to receive over $650 million of the trapped fund.

A source close to one of the foreign airlines confided in Daily Independent on Tuesday that whatever CBN paid was just one of the two phases of the trapped funds in the country.

Earlier, the Acting Director of Corpo­rate Communications at the CBN, Mrs. Hakama Sidi Ali, said the apex bank has concluded the payment of all verified claims by airlines with an additional $64.44 million to the concerned airlines.

In the statement, she noted that the latest amount paid to the airlines has brought the total ver­ified amount paid to that sector to $136.73 million.

She added that all the veri­fied airline claims had now been cleared.

According to her, the CBN governor, Olayemi Cardoso, and his team were doubly commit­ted and would stop at nothing to ensure that the verified backlog of payments across all other sec­tors were cleared and confidence restored in the Nigerian foreign exchange market.

Furthermore, she assured that the CBN was working with stakeholders to ensure liquidity improves within the forex market, thereby reducing pressure on the naira.

While expressing optimism that the market would respond positively with the latest injec­tion of over $64 million, she ad­monished actors in the foreign exchange market to guard against speculation as such actions that could hurt the naira.

Daily Independent reports that the International Air Transport Association (IATA) has confirmed the receipt of the total $136.73 million from the CBN to the air­lines, which would be distributed among the foreign airlines.

A source close to one of the airlines told our correspondent on Tuesday that the money released was the ticket sold through the Billing and Settlement Plan (BSP) platform of IATA, which the as­sociation ought to release to the airlines.

What the government cleared was the tickets sold through the platform of IATA, which is also known as ITFS. IATA was sup­posed to remit your money to you, but it cannot do so immediately because it has to bid for the money, too, through the CBN,” the source said.

One of the foreign airlines per­sonnel in Nigeria told our corre­spondent that the “forward date” trapped funds with the apex bank in Nigeria was yet to be received by them.

It was also learnt that the CBN was yet to release the funds trapped in the country through their commercial banks.

Another source in one of the foreign airlines in Nigeria also told our correspondent that the bulk of the money with the com­mercial banks, which the CBN is also supposed to release to the airlines, was yet to be given by the apex bank.

“The money that we (foreign airlines) bid directly through the commercial banks, we are still hoping the CBN will release that one too because the money is with the bank. The CBN has to release the money to the banks, too,” the source said.

However, it was gathered that Emirates and Etihad Airlines, which left the country in 2022 in the wake of the trapped funds crisis may return.

Daily Independent learnt the two United Arab Emirates (UAE) carriers may benefit fully from the trapped funds released to IATA.

Emirates Airlines had closed its office in Nigeria in October 2022, claiming about $85 million trapped funds in Nigeria.

However, Etihad’s trapped funds could not be verified.

Efforts made to confirm the payment of the total $136.73 mil­lion claim by CBN proved abor­tive as Dr. Samson Fatokun, IATA representative in Nigeria, did not respond to calls made to his mo­bile phone.

Other reports

Foreign airlines that operate in Nigeria have expressed disappointment over the $61 million paid by the federal government as first installment to offset the $800 million revenue of the international carriers trapped in Nigeria.
The airlines described the amount paid as insignificant, saying they may review their continued flight operation to Nigeria because government did not take the payment of the blocked fund as priority.

This was disclosed by the President of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), Dr. Kingsley Nwokoma, during a press conference held at the Murtala Muhammed International Airport, Lagos, yesterday.
The association said the $61 million recently released by the Central Bank of Nigeria (CBN) was negligible and complained that government did not make it clear whether it would be offsetting the trapped funds on planned payment schedule, which would enable the airlines know when all the funds would be released to them.

Nwokoma, warned that if the crisis surrounding the debt was not resolved early, some of the airlines may follow Etihad and Emirates Airlines to withdraw service from Nigeria.
He regretted that the federal government violated the Bilateral Air Service Agreement (BASA) arrangements signed with the various countries the airlines emanated from, stressing that the action signified negativity on the image of Nigeria.
He attributed the blocked funds to one of the reasons airfares out of Nigeria were high, disclosing that the country was losing some of its potential travellers to neighbouring African countries, which have relatively lower fares.

Nwokoma, lamented that with the current situation, most of the foreign airlines operating into the country were taking money from their operations elsewhere to sustain operations in the country.
He said: “We are not saying the government should pay all, but the government should have a plan to pay a chunk of the money every quarter. The fear is that if it continues like this, some of the airlines may go.

“The last conversation we had with Mr. Festus Keyamo, the Minister of Aviation and Aerospace Development, seemed good. He sounded serious about the payment and they have done $61 million thus far.
“Nigeria is just a very strange country. Some are still saying that the airlines should not be asking for any money from Nigeria. What is BASA? BASA is signed by countries and not airlines. We signed our commitment to the BASA and we are not doing anything about it.

“If all countries are defaulting like Nigeria, there will not be any airline that comes into the country again. The aviation industry is predicated on the U.S dollars. You pay your catering, handling, hotel and a lot of things in dollars and if you don’t pay, your crew would be sent out.”
Nwokoma, insisted that the $61 million released by the government out of the $800 million was insignificant and without any impact on the operations of the foreign airlines.

He advised the federal government to discuss with the foreign airlines on the modalities of payment for the blocked funds.  
“The foreign airlines are not talking about it because they felt it is a little drop. It is not something to be too excited about. If we have had about $300 million now or half of what the airlines are being owed, then, you can say there is hope.

“The government should sit with the foreign airlines just like how you sign your BASA agreements and agree on quarterly payment of these funds. The government should please keep to that agreement. By then, we will be making progress,” he said.

The CBN had last week disbursed $61.64 million to foreign airlines through various Deposit Money Banks (DMBs).
According to a statement issued by Mrs. Hakama Sidi-Ali, its Acting Director, Corporate Communications, in Abuja on Sunday, the disbursement was in fulfillment of CBN’s commitment to eliminate the backlog of pending matured foreign exchange in DMBs.
Sidi-Ali had said that the initiative was part of the CBN’s efforts to reduce its remaining liability to the airlines.

Dear Readers, Good and credible news reportage is tedious task and requires huge finances.

We are soliciting your Noble support for as low as N1,000 your support would go a long way in assisting us to continue to guarantee our readers quality news.
Bank transfers can be made to:
Account Name: Harvest and Commercial
Bank: Sterling Bank
Account Number: 0078627735