Emirates slashes Nigeria flights over $85m in trapped ticket revenue
Emirates plans to reduce flights to destinations in Nigeria from August 15, 2022 due to issues the gulf carrier is having with gaining access to ticket sales revenue being withheld in Nigeria, the carrier told the country’s Aviation Ministry.
In a letter, address to Nigeria’s Minister of Aviation, Hadi Sirika, dated July 22 2022, the airline said it had “no choice” but to take action in reducing its operations to the West African country to “mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” according to a local media report by The Cable.
“As of July 2022, Emirates has US$ 85 million of funds awaiting repatriation from Nigeria. This figure has been rising by more than $US 10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and 5 to Abuja continue to accumulate,” the letter continued.
Emirates said that the inability to repatriate its revenue was affecting its operational costs and the commercial viability of its services to Nigeria.
Nigeria’s aviation industry is currently reeling from the global fuel crisis and shortage of access to foreign currency. However, Emirates proposed to pay for jet fuel in Nigeria with Naira instead of its native currency as an alternative measure to lessen the losses it was experiencing.
“We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post COVID-19 climate,” the letter said. “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 on-going costs, however this request was denied by the supplier. This means that not only are Emirates’ revenues accumulating, we also have to send hard currency into Nigeria to sustain our own operations. Meanwhile, our revenues are out of reach and not even earning credit interest.”
Emirates also said that its efforts to engage the Central Bank of Nigeria (CBN) and its officials to help resolve the situation did not bring forth positive results.
A similar outcome resulted from its discussions on improving forex allocation, held with Emirate’s own bank in Nigeria and in collaboration with the International Air Transport Association (IATA). However, Emirates stated that it would re-consider its decision if revenues were allowed to be recovered.
More airlines could take a similar stance on their operations to Nigeria if airlines’ revenues continued to be locked, according to Reuters.
$1 billion of blocked funds in Africa – IATA
As of May 2022, a total of $1.6 billion in funds was blocked by 20 countries across the globe, IATA noted in a report issued during the same month. However, 67% is attributed to some African countries.
IATA also said a total of $1 billion is tied up in 12 African countries, with Nigeria alone “holding back” $450 million, the largest amount withheld by any African country.
Countries among the list include Zimbabwe – $100m, Algeria - $96m, Eritrea - $79m and Ethiopia - $75m.
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