The International Air Transport Association, the Geneva-based trade association representing world airlines, has expressed fears that foreign airlines operating in Nigeria, may lose about $200m to exchange rate depreciation.
IATA Regional Vice-President for Africa and the Middle East, Kamil Al Awadhi, said the issue of trapped funds was being exacerbated by the depreciation of the naira, which had dropped significantly against the dollar. He spoke in an interview with CNBC monitored by our correspondent.
The IATA VP spoke against the backdrop of the over $700m foreign airlines’ ticket revenue reportedly still trapped in Nigeria.
The Central Bank of Nigeria last week said it had paid all verified debts owed foreign airlines but IATA in a swift response said foreign carriers operating in the country still had over $700m trapped in Nigeria. Meanwhile, local travel agents of the National Association of Nigerian Travel Agencies have asked foreign airlines in the country to release lower fares in their inventory or face severe consequences. This came on the back of the CBN report of completing payments of foreign airlines debts.
However, IATA VP had insisted the CBN needed to complete all outstanding ticket revenue trapped in the country.
“Airlines should not be unfairly penalised by the lower exchange rate,” the IATA VP warned in a statement last week.
But speaking to CNBC, AlAwadhi said, “You also have to take into consideration the blocked funds and the fair value of the blocked funds. If you have $720m blocked and then you devalue the naira by 30 per cent, you have wiped out over $200m of airlines’ money, and they have to compensate that.”
He added, “Airlines have lost a lot of money operating in and out of Nigeria and it continues to be so under the current environment.”
The naira has been in a free fall against the dollar in recent weeks.