• Monday, June 17, 2024
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BusinessDay

Foreign airlines mull comeback as FG clears trapped funds

Price war in our skies

Foreign airlines in Nigeria are planning expansions after the federal government cleared 98 percent of their trapped funds.

Some airlines are planning an increase in frequencies and routes while others are mulling flight resumptions.

BusinessDay’s findings show that Delta Airlines will resume its daily service to Lagos, from New York-JFK on December 1.

Kenya Airways will in a few weeks increase flight frequencies to Lagos, with daily flights set to rise from seven weekly frequencies to 10.

Emirates will resume services to Nigeria from 1 October 2024, operating a daily service between Lagos and Dubai, and offering customers more choice and connectivity from Nigeria’s largest city to, and through, Dubai.

Neos S.p.A. of Italy has indicated interest to commence flight operations from Nigeria and has applied for a flight permit from the Nigeria Civil Aviation Authority (NCAA).

“The airline has been issued Foreign Carrier’s Operation Permit (FCOP) and once the process is completed, NEO SPA will commence operations into Nigeria,” the Italian airline said.

Royal Air Maroc, Morocco’s national airline, last week launched direct flights from Abuja to Casablanca, Morocco’s bustling economic centre. This is in addition to Lagos which it currently operates from.

British Airways recently opened a renovated luxurious lounge in Lagos airport. SDS Lounge Group will operate the lounge on behalf of British Airways.

The International Air Transport Association (IATA) recently commended the Federal Government for clearing 98 percent of airlines trapped funds in the country, which the carriers had hitherto been unable to repatriate.

Willie Walsh, IATA’s director-general, disclosed this in a statement on Sunday.

At its peak in June 2023, Walsh said, Nigeria’s blocked funds amounted to $850 million, significantly affecting airlines’ operations and finances in the country.

“Carriers faced difficulties in repatriating revenues in US dollars, and the high volume of blocked funds led some airlines to reduce their operations and one carrier to temporarily cease operations to Nigeria, which severely impacted the country’s aviation industry,” he said.

As at September 2023, foreign airlines’ trapped funds in Africa hit a record $1.68 billion by the end of September 2023 with Nigeria topping the list of debtors.

Emirates airlines suspended flight operations in November 2022 because of its inability to repatriate trapped funds.

Nigerians have been made to pay higher fares on international flights for over two years. This was as all the foreign airlines increased their flight tickets, citing the high exchange rate and trapped funds, thereby deliberately blocking low inventory tickets and making travel unbearable for Nigerians.

Stakeholders have said the positive development of clearing airlines’ trapped funds would lead to expansion of routes and increased frequencies.

Kingsley Nwokoma, President of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), told BusinessDay that the aviation sector is about to experience positive developments following the repatriation of trapped funds.

“Airlines having more frequency is a positive. Like I keep saying, the more the merrier,” Nwokoma said.

“Once everyone is fine and the ease of doing business is being adhered to, the industry will be better for everyone. We can all see that the prices of tickets have gone down. The airlines have also opened up some lower inventories. Hopefully, Emirates will come in and the United Arab Emirates (UAE) will look into the visa issue,” Nwokoma said.

Adnan Kazim, Emirates’ Deputy President and Chief Commercial Officer said, “We are excited to resume our services to Nigeria. The Lagos-Dubai service has traditionally been popular with customers in Nigeria and we hope to reconnect leisure and business travellers to Dubai and onwards to our network of over 140 destinations.

“We thank the Nigerian government for their partnership and support in re-establishing this route and we look forward to welcoming passengers back onboard,” Kazim said.

With the resumption of operations to Nigeria, Emirates operates 19 gateways in Africa with 157 flights per week from Dubai. There’s a further reach to an additional 130 regional points in Africa through its codeshare and interline partnerships with South African Airways, Airlink, Royal Air Maroc, Tunis Air, among others.

As a major economic hub in Africa, Nigeria and the UAE have built strong bilateral trade relations over the years, headlined by Lagos as the nation’s commercial centre.

Thairu Julius, the Chief Commercial Customer Officer at Kenya Airways said Nigeria is an important market for the airline and the second biggest market in Africa.

Reflecting on Kenya Airways’ longstanding presence in Lagos since 1998, Julius reiterated the airline’s commitment to prioritising Africa and fostering intercontinental connections.

“We pride ourselves as an airline that puts Africa first and connects Africa,” he said, underlining the pivotal role of air connectivity in spurring trade, tourism, and economic progress across the continent.

Looking ahead, Kenya Airways is considering the prospect of introducing additional routes, including flights to Abuja, to further bolster accessibility within Nigeria and beyond.

Juan Pedro, the head of sales for Africa, South Asia and Middle East, BA who spoke during the renovation of its lounge at Lagos airport said Lagos is an incredible city for them and that is why they have to look at the facilities and see how to make them better.

The airline launched a partnership with Akoje Gallery – founded by Maro Itoje and Khalil Akar – to curate an innovative new in-lounge exhibition featuring and celebrating guest artists.

Calum Laming, British Airways’ chief customer officer, said: “We’re focused on investing in the entire customer journey, not just on board. For many of our customers, lounges are an important part of their experience, and the re-design of our Lagos lounge is a key part of our transformation strategy across our lounges around the world.

Delta Airlines currently operates daily service between Atlanta and Lagos and, with the resumption of daily New York-JFK service, the airline will offer a total of 14 weekly flights to Nigeria in December through the first half of January and 10 weekly flights for the remainder of winter 2024.

“These enhancements reflect our dedication to meeting the evolving needs of our customers,” said Joe Esposito, Delta’s Senior Vice President of Network Planning. “We’re expanding our options for customers to experience the premium service and elevated hospitality they expect from Delta.”

Susan Akporaiye, former president National Association of Nigerian Travel Agencies(NANTA) said clearing of trapped funds has been going on for over two months and all the while, airlines have been planning to increase frequencies and routes because they know Nigeria is a lucrative market.

“The repatriation of trapped funds has brought us back to business as usual because since this trapped funds issue started, it has not been usual business with the airlines,” Akporaiye said.

“There have been restrictions on what we can sell and the kind of tickets that are allowed for us to sell from here because of difficulty in getting the foreign exchange.

“This is already changing. The restrictions have been lifted by some airlines. It is a gradual process. I guess they still want to be watching how things are going especially knowing well that we are having some economical issues in Nigeria. But they have been opening up. Some foreign airlines are already applying for extra slots,” Akporaiye added.

She said airlines that are not increasing frequencies, would probably commence flights from Abuja.

“Air Maroc has been flying from Lagos only. Their Lagos frequency is still the same. So rather than add additional frequency in Lagos, they decided to add Abuja to their route. So things are looking better because of the trapped funds repatriation. If the trapped funds are no longer there, then there would be no reason to limit business. The airlines are opening up to a lot of things.

“The airlines know that Nigeria is a big market. This was why many of them did not go during the trapped funds era. They stayed. Nigeria continues to be a very profitable market. Airlines have relaxed a lot of rules and regulations and are willing to launch back and begin to make money. Better things await the sector. The airlines see it and they know it,” Akporaiye said.