BusinessDay
NigeriaDecides2023

Emefiele seeks reciprocity in flight frequencies for Nigerian airlines abroad

....says CBN not under compulsion to release dollars to airlines for ticket proceeds

Nigeria’s Central Bank Governor, Godwin Emefiele on Tuesday urged countries with the Bilateral Air Services Agreement (BASA) with Nigeria to grant reciprocal flight frequencies to Nigerian airlines in line with the commercial pact.

Emefiele’s call at a media briefing to announce the outcomes of the two days meeting of the Monetary Policy Committee (MPC) in Abuja was against the recent issues arising from the difficulty experienced by the foreign airlines in repatriating the ticket proceeds, for which the CBN has had to pay some $265m.

Recall that foreign airlines operating in the country threatened recently to stop flights into Nigeria on the back of huge outstanding ticket proceeds which they were not able to repatriate because they were demanding the CBN’s CBN’s official dollar rate, citing Bilateral Air Services Agreement between their respective countries and Nigeria.

BASA gives details of the flight frequencies between the airlines of two countries on how many times each would fly to the other country’s airport or airports.

Also, in the principle of reciprocity, it is expected that both countries’ airlines would operate at equal frequencies but whereby the airline of one country operates more frequencies than the other, there is usually monetary compensation, depending on the agreement.

But Emefiele is worried that these airlines have also failed to comply with some of the provisions in the BASA, especially as it relates to the reciprocity of flight frequencies, causing Nigeria and the local airlines to lose anticipated revenues.

His words: “We would like to appeal to the countries where the foreign airlines are domiciled or where their flights originate that they should please give Nigerian airlines a chance to land their aircraft in their countries, also in line with the BASA.

“You cannot be having 21 landing slots a week from your country into Nigeria and yet, you have not given a Nigerian airline that wants to land its aircraft in your country even up to seven landings. For us in Nigeria, this is unacceptable.

He said the interest of the Central Bank is that such will also help ease pressure on the foreign reserves and exchange rate since the Nigerian airlines will collect fares in the local currency and will not need to therefore repatriate their funds.

“This also means that the only requests from the Nigerian airlines to the CBN would then be a foreign exchange, when needed, to import aircraft, insurance and training, which is relatively cheaper if they would also need to repatriate revenues from ticket sales.

Read also: Mixed fortunes as foreign airlines expand Nigerian footprint

“So Nigerian airlines must also be given equal chance to land their planes in other countries in line with bilateral air services agreements, that is what we are pleading for.

“There are situations where some countries have their airlines land up to 21 times in Nigeria, yet when a Nigerian airline makes a similar request, it is turned down or not treated fairly or with the urgency that such deserves.

“That is unacceptable with BASA and I think Nigerians must rise to demand the right for Nigerian airlines,” Emefiele reiterated.

On the backlog of proceeds from ticket sales, which has been a lingering issue, Emefiele assured that that would be cleared.

The governor further explained that the aviation sector has always enjoyed priority allocation because of the need to ease travel.

He said at some point, the CBN observed that the demand for travel shot up and consequently, the naira value of tickets issued by the foreign airlines increased, and mounted so much pressure, such that the CBN decided to release the $265m.

“We will do everything possible, we are determined to clear the backlog and we will ensure that the airline cumulative backlog is cleared.

“But I think it is important to say that while the foreign airlines have been calling that we should respect bilateral air services agreement that says the proceeds of all their ticket sales must be repatriated to the originating country, it did not also say that you must repatriate all your dollars through the central bank,” Emefiele quickly added.

“There is no law that makes it compulsory that you must buy your dollars from the central bank.

“When you put your money in your account, you tell your bank to buy you dollars, and they will go to the legitimate or approved sources which in this case is the I&E window to buy dollars and pay for ticket sales proceeds.

“If they don’t find, yes, they may resort to the CBN, but it does not mean that the CBN is under compulsion to provide the dollars that you need,” he further clarified.

He said he was making the clarification to stop the widely-held conclusions that the Central Bank must necessarily provide dollars at its own rate for the airlines to repatriate their proceeds.

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