Trapped fund: Nigerian travel agents lose $500m in 1yr – NANTA
…says 70% tickets originating from Nigeria sold by foreign agents
Travel agents under the auspices of National Association of Nigeria Travel Agencies (NANTA) say they have lost about $500m revenue between February 2022 and date as a result of a significant drop in ticket sales, as foreign airlines whose funds are trapped in the country are denying them business opportunities.
Airfares have risen to almost 400 percent to all international destinations as foreign airlines operating in Nigeria blocked all low ticket inventories on their websites and have since continued to sell the highest inventories, making it difficult for passengers to buy affordable tickets through local travel agents.
The airlines also stopped travel agents in Nigeria from issuing tickets emanating from other countries into Nigeria in a bid to reduce the amount of money that would be trapped in Nigeria.
The development has seen Nigerian travellers by-pass local travel agents to purchase tickets from agents in Ghana and other African countries due to skyrocketing fares as a result of the $550 million blocked funds.
“Agencies are now forced to fold, leave the country or try to use neighbouring countries to sell to their customers. Nigeria travel market continues to be at the losing end with the airlines being indifferent to the plight of travellers and as a body we are left with no option than to call on the government to be more strategic, deliberate and direct in resolving this multifaceted dilemma,” Susan Akporiaye, president NANTA said during an interview session on Friday.
Akporiaye said that international airlines were seeing full flights to Nigeria but local travel agents sold less than 30 percent of all the tickets that originated from Nigeria.
She said since the Central Bank of Nigeria (CBN) started remitting foreign airlines’ trapped funds, no significant impact was achieved as airlines continue with even higher fares as though they determine what happens in Nigeria.
BusinessDay’s checks show that currently, a prospective Nigerian traveller needs about N3 million to purchase an economy ticket while date changes on some airlines go as high as between N1.5m and N18m.
The NANTA president said the situation has crippled travel agents, drove clients away, and made Nigerians travel across our borders at huge security risk to connect cheaper flights.
She accused the foreign airlines of taking advantage of the trapped funds to exploit Nigerians, adding that countries also facing trapped funds crisis still access ticket inventories.
“The reaction of the foreign airlines is grossly unfair to the Nigerian travelling public and to us as a nation with a seeming disdain to the existing cordial business relationship. This gravely threatens our survival as travel practitioners in Nigeria.
“The suffocating profiteering practice by the majority of the foreign airlines is unbelievable and unexplainable in a Nigeria market that is ranked by many indices of International Air Transport Association (IATA) as one of the best in Africa as well as the best post-COVID recovery rates across Africa and the Middle East. The Nigerian market should be applauded, but the reverse is the case,” Akporiaye said.
She said the airlines ought to respect and appreciate the impact of the traffic the Nigerian market offers and seek better ways to ensure there is mutual benefit in tandem with the current reality.
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She said the trade rules were obnoxious and not consistent with global best practices, and the fares unjustifiably high, all in reaction to trapped funds. She called on the government to wade into the situation and bring normalcy to the sector.
“We hold the stand that the government still retains the responsibility to commit to agreements with airlines to protect the sector and call the airlines to order when there are obvious excesses from them that puts the entire industry in jeopardy; because the current fare structure and practices are exploitative to Nigerian travellers as well as agencies who provide a reasonable number of jobs for our country.
“This heavy cost to Nigerian travellers is unnecessary. We strongly request the airlines to open inventories to tally with what obtains in similar markets,” she said.
In December 2022, the International Air Transport Association (IATA) ranked Nigeria tops among five markets with blocked funds
IATA revealed that the top five markets with blocked funds (excluding Venezuela) are: Nigeria: $551 million, Pakistan: $225 million, Bangladesh: $208 million, Lebanon: $144 million and Algeria: $140 million.
In the last one year, foreign airlines have been finding it difficult to access their funds from tickets sold in the country as a result of foreign exchange scarcity and have resorted to buying dollars from the black market for as high as N700 to a dollar against CBN’s N429 to a dollar rate.
The trapped funds have since February last year grown from $100 million to over $ 550 million, making it very difficult for airlines to operate seamlessly.
“People are travelling back to Nigeria, even though our sales are not showing the volume, it is cheaper for people to buy tickets outside Nigeria than buy from Nigeria because the naira exchange rate is very high. The airlines are opening cheaper ticket inventories outside Nigeria but closed these inventories in Nigeria.
“If you enter the aircraft coming into Nigeria, they are still full. People are coming home and the Nigeria Civil Aviation Authority is losing five percent on every ticket that is not bought from Nigeria. If we are losing five percent and the plane is full, it means Nigeria is like a dumping ground,” Bankole Bernard, managing director/Founder Finchglow Travels and former NANTA president, said.