The International Air Transport Association (IATA) has said the high cost of foreign airline’s tickets in Nigeria is a fall out of the trapped funds belonging to foreign airlines operating in Nigeria.
IATA disclosed this in a letter addressed to the Minister of Aviation, Hadi Sirika, signed by the Area Manager West and Central Africa, Dr Samson Fatokun.
The association also disclosed that the trapped funds had risen by 12.39 per cent to $743,721,097 in January 2023 from $662m in January 2022.
“For over a year, Nigeria has been the country with the highest amount of airline-blocked funds in the world. Please find attached the comparative table of airlines’ blocked funds by country.
“Moreover, as of January 2023, airlines’ blocked funds in Nigeria have increased to $743.721.092 from $662m in January 2022 and $549m in December 2022,” the letter read.
Fatokun said the increasing backlog of blocked funds of international airlines will impact negatively the foreign direct investment in the country, at a moment the country was expecting investment in the concession of some of its major airports, just as it violates the Bilateral Air Service Agreement.
He further stated that the country was flouting its contractual obligations by not facilitating the repatriation of the airlines’ funds.
Fatokun stated that to mitigate the current crisis airlines were taking drastic steps like reducing the number of frequencies or the number of seats made available for sale in the Nigerian market.
According to him, these mitigation measures will reduce passenger and cargo access to the country.
He said, “Going by the law of demand and supply, the reduction of airline inventories in the Nigerian market will lead to the ticket fare increase, which will further burden average Nigerians.”
He further warned that the downstream sector of the aviation industry such as the travel agencies, freight forwarders and ground handling companies will be negatively impacted if airlines were compelled to reduce their capacities, thereby, leading to job losses.
IATA, therefore, urged the minister to intervene and ensure the resolution of the issue of airlines’ blocked funds in Nigeria.
In his response, the Minister of Aviation, Hadi Sirika, in a meeting with the IATA team, foreign airlines and travel agents assured the foreign airlines that he would take the issue up with the Presidency and the Central Bank of Nigeria.
