The International Air Transport Association (IATA) Regional Vice President, Kamil Alawadhi, has reacted to the recent decision by one of the global leading airlines- the Emirates’ decision to cut flights to Nigeria due to a continuing standoff over blocked funds and urged the government to free-up the airline’s money.
Dubai’s Emirates announced that it will suspend flights to Nigeria from next month over an inability to repatriate funds from Africa’s most populous nation..
The decision highlights the deadlock faced by international carriers that fly to Nigeria and other African countries where governments are not willing to release foreign currency in income and profits earned -in the long run crippling operations.
In the case of Nigeria ,its government has restricted access to foreign currency for imports and for investors seeking to repatriate their profits due to a shortage of dollars. Nigeria gets about 90% of its foreign exchange from oil, but is struggling to produce due to pipeline theft and years of under-investment.
Emirates said it had made no progress in efforts to initiate dialogue with the relevant authorities for their urgent intervention. “Therefore, Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective 1 September 2022, to limit further losses and impact on our operational costs that continue to accumulate in the market,” it said in a statement.
Now , IATA has weighed in and urged the Nigerian government to be considerate and release some $ 464 M its holding in blocked funds .
“IATA is disappointed that the amount of airline money blocked from repatriation by the Nigerian government grew to $464 million in July. This is airline money and its repatriation is protected by international agreements in which Nigeria participates,” IATA ‘s Regional Vice President, Kamil Alawadhi said in a statement .
Alawadhi further stated that IATA’s many warnings that failure to restore timely repatriation will hurt Nigeria with reduced air connectivity are proving true with the withdrawal of Emirates from the market.
“Airlines cannot be expected to fly if they cannot realize the revenue from ticket sales. Loss of air connectivity harms the local economy, hurts investor confidence, impacts jobs and peoples livelihoods. It’s time for the Government of Nigeria to prioritize the release of airline funds before more damage is done,” he added .
Back ground
At the recently conluded IATA AGM in Doha Qatar ,Mr. Alawadhi told the media that IATA was moving strongly to urge government to release the blocked funds for airlines to free up resources that can boost the quick recovery of the industry in Africa where operators are struggling due to limited or no access to their operation revenues .
Blocked funds refer to the money that airlines have difficulties repatriating from some countries because of governments foreign exchange controls.
“A financially viable air transport sector supports jobs and must be a driving force for Africa and the Middle East economic recovery from COVID-19. A priority is releasing blocked funds, the IATA VP stated .
As of April, globally, there is a total $1.6 billion in funds blocked by 20 countries worldwide. Of this, 67% is blocked in Africa for a total of $1 billion, tied up in 12 African countries. Nigeria alone is holding back $464 million. It is the most amount blocked by any single African country, and the amount is rising every week.
