Mega carrier, Emirates Airlines has taken the hard decision to stop flight operations to Nigeria in its futile efforts to repatriate its over $85 million trapped in the country. To this end, the carrier announced that it would cease flight services to Nigeria on Sept 1, 2022.
The $85 million Emirates fund is part of the over $450 million airlines’ funds still withheld by the country.
Other countries in Africa that hold on to the huge amounts of airlines’ revenues include Zimbabwe – $100 million; Algeria – $96 million; Eritrea – $79 million and Ethiopia, $75 million (As of June 2022)
There are indications that other international airlines whose funds are equally stuck are monitoring the situation that could see them cut down drastically on their flight services or completely suspend flight services to Nigeria to discourage loss of more money.
The International Air Transport Association (IATA) noted that the trapped fund in Nigeria was about 25 percent of similar funds stuck in other countries as of April.
The funds are proceeds from sales of foreign airlines’ tickets, among others, that are trapped in Nigeria. As of March this year, the trapped amount was $283 million ((N158.48 billion). According to IATA, the trapped fund had hit $450 million.
The accumulated funds are seriously eroding the image of the country as the clearing house for over 200 global airlines said the attitude of the Nigerian government towards the trapped fund is “unacceptable” and one that has seriously put foreign airlines in dire strait.
Emirates in a statement today said it had tried every avenue to address its ongoing challenges in repatriating funds from Nigeria and had made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution.
The carrier had last month made the startling revelation that the Nigerian Government was holding on to its $85 million dollars; a situation it said would make it cut down its frequencies to Nigeria from 11 to seven flights. The decision came into effect on August 15th, 2022.
“Regrettably there has been no progress. 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”.
“We sincerely regret the inconvenience caused to our customers, however, the circumstances are beyond our control at this stage. We will be working to help impacted customers make alternative travel arrangements wherever possible”.
“Should there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria, we will of course re-evaluate our decision. We remain keen to serve Nigeria, and our operations provide much-needed connectivity for Nigerian travelers, providing access to trade and tourism opportunities to Dubai, and to our broader network of over 130 destinations”.”
“As of July 2022, Emirates had hit $85 million of funds awaiting repatriation from Nigeria. This figure has been rising by $10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and five to Abuja continue to accumulate,” it said.
It noted that the funds were urgently needed to meet its operational costs and maintain the commercial viability of its services to Nigeria.
“We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post-COVID-19 climate. Emirates did try to stem the losses by proposing to pay for fuel in Nigeria in naira, which would have at least reduced one element of our ongoing costs, however, this request was denied by the supplier,” the statement reads.
The trapped revenue is said to be a result of a forex shortage, a sign that Nigeria is facing serious financial challenges.
What is playing out is reminiscent of what happened in 2016 when the world went through a recession that seriously impacted global economies. The situation saw the United States carrier, United Airlines suspend flight operations to Nigeria including other airlines reducing capacity by over 50 percent.