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Concerns heighten over Foreign Airlines’ trapped fund

Foreign Airlines’ trapped fund in Nigeria has continued to generate reactions from stakeholders in the aviation sector.

The stakeholders fear that if the matter is not addressed urgently it could dent Nigeria’s image globally, discourage foreign investment in the industry as well as affect tourism.

The Bilateral Air Services Agreement, BASA and the federal government signed agreement with some countries, spells out that for every ticket sold the money will be repatriated in dollars to the home countries of the foreign airlines.

Unfortunately, due to paucity of dollars as a result of the global economic meltdown, the agreement has not been adhered to strictly.

According to statistics, as of December 2022, the trapped revenue was $550 million despite payment of some amount by the central bank of Nigeria, CBN.

Currently, the balance of the BASA fund is over $743 million from $662 million in January 2023.

This had led to some foreign airlines leaving the country while others still operating have increased air fares, a development the President, National Association of Nigeria Travel Agencies, NANTA, Mrs. Susan Akporiaye says, is hurting many Nigerian travellers.

She said, sales have reduced and the business on the verge of collapse. “The current fare structure and practices are exploitative to the Nigerian travellers as well as the travel agencies”.

Currently, airfares on economy class is between N1.5 million to N3 million.
Meanwhile, all the lower inventories by all the foreign airlines have been removed from the sales portal.

There had been many interventions by the National Assembly committees on aviation.

The committees have called on the airlines to show understanding as government was making efforts to ensure that their ticket proceeds were repatriated.

However, stakeholders believe there is a way out of the situation if government put certain mechanisms in place to address the problem.

President, Aviation Safety Roundtable Initiative, ASRTI, Dr. Gbenga Olowo said, appeals are no longer tenable as one cannot continue to appeal to a patient who needs oxygen.

He said what needs to be done is for the government to encourage indigenous airlines to participate to reduce the volume of the trapped funds. “Until we begin to showcase our own, we may not be having an solution to the problem”.

Former President, NANTA, Mr. Bankole Bernard said the foreign airlines’ funds became trapped because the CBN refused to give them at the official rate.

He said, as of today, they issue tickets at N551 to a dollar, insisting government should come out clear on what they want to offer to clear the trapped funds. “The funds became trapped because they were not willing to give them at the official rate”.

An aircraft maintenance engineer and a Nigerian based in the U.S, Mr. Femi Adeniji suggested amongst others, a repayment plan with a promissory note and also give them incentives. “Tax break, grants, improving Nigeria foreign exchange system, reducing bureaucracy and corruption in the aviation sector”.

During a recent visit to the Minister of Aviation, Senator Hadi Sirika by the representatives of the International Air Transport Association, IATA and NANTA, the minister promised the matter will be resolved soon and called for patience.

Reporting by Nosa Aituamen; Editing by Julian Osamoto