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Reps blame foreign airline operators for $700m trapped funds

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The House of Representatives has alleged that foreign airline operators are breaching the extant financial regulations issued by Central Bank of Nigeria (CBN) on foreign exchange, leading to the blocked $700 million belonging to the operators.

Femi Gbajabiamila, speaker of the House stated this a meeting with stakeholders in the aviation sector in Abuja on Monday.

At the meeting, Airline Operators of Nigeria (AON) expressed concern over capital flight, breach of Bilateral Air Service Agreement (BASA), high cost of tickets/airfare imposed on Nigerians estimated at about 50% above other countries including Ghana, South Africa, among others by the foreign operators.

In his remarks, Obiora Okonkwo, the
chairman of United Nigeria Airline who spoke on behalf of AON, alleged that foreign airlines after receiving payment at the N740 parallel market rate are fond of compelling CBN to secure the N447 official exchange rate.

The AON also accused the authorities of International Air Transport Association (IATA) of favoritism in the implementation of policy and regulations, alleging that foreign airlines are barring Nigerians from using debit cards to pay for the tickets.

Samson Fatokun, IATA’s Area manager West & Central Africa said the foreign airlines are demanding for the repatriation of $700 million blocked fund since 2020 to date.

Fatokun said: “It is not written in any BASA that they have to sell in dollar or not sell in dollar. It’s a CBN regulation that airlines are not expected, should not sell in dollars, it’s a CBN regulation.”

Gbajabiamila had earlier urged that: “in the meantime, we have to look for solutions. I’m also going to plead with foreign airlines to show some good faith. And what’s that good faith or how do you show that good faith? To open up your portals or whatever it is for business to continue as usual so that Nigerians can purchase your tickets so that the Travel Agents can work while this is going on.

Read also: Airlines trapped funds: FG yet to pay promised $265m in full

“So, while you are doing yours there, we are doing ours here. It cannot be a one-sided thing. So, we can give ourselves some time so that once you go back to status quo, we will also at this point look into how you can repatriate or how you can get your funds. If it’s special intervention or whatever, we will find a way to deal with it.

“So, it has to be for want of a better word, symbiotic and as well do our end and you need to do your end within some good faith assurance from you.

“By self-admission, laws are actually been broken right. You did say about an hour ago that yes under BASA law, they are not allowed to sell foreign currency. Okay, so it’s not a BASA regulation, it’s a Nigerian law, either way, some laws is being broken.

“So, the question is whether BASA or CBN law, so having heard that, let me still maintain my very soft punch to the Airlines, please talk to your guys out there that you are breaking the CBN regulations.
“And I will also appeal to you to revert to status-quo while we look at the matter. Once that is done, it gives us more motivation to try and assist.”

Gbajabiamila also urged the NCAA and all regulatory agencies who collect landing charges and other regulatory taxes in dollars from the foreign airlines, should under the planned “arrangement with local fuel suppliers whereby they are going on future prices agreeing paying in foreign exchange is also good for the local fuel supply because they are also source of foreign exchange for import.

He said:”Since we have found ourselves in this situation and if it’s not contravening any law, part of things you might consider is to go into discussion with NCAA, fuel suppliers to know if a consideration can be made that some of this naira fund can be used in place of dollar to pay this local expenses.

“This you have told us is in violation of the IATA laws that is charging, not allowing selling tickets in foreign exchange. We all expect you to ensure enforcement.”

While reacting to the speaker’s charge that the foreign airlines should revert to status-quo, Fatokun noted that: “These are in-country managers, they don’t have the final say on the operations, their functions do not extend to that. They have to go back to their head office, communicate that to heir head offices and then they would respond.”

Speaking on the blocked fund, Chima Ihe Deputy President of National Association of Nigeria Travel Agencies (NANTA), said: “from the Travelling Agencies side, we are pleading with the government to see how they can help the airlines to access this fund.”

Also speaking, Adetutu Otuyalo, the regional commercial manager of British Airways dismissed report that the foreign airlines collect dollars for payment of tickets, saying “for British Airways, we have to make changes to sell tickets in Nigeria.

“This time two years ago, anybody that has a Nigerian card can successfully make bookings on British Airways. I can attest to that. But what has happened is that, the Banks have placed a limit on the Nigerian cards. Before you could do a thousand, 2,000, 3,000 on those cards. But right now, probably you could do $100 on those cards.

“So, we are not discriminating, we did not insist that it must be a dollar card. If you are holding a Ghanaian cedi card you can actually make booking on British airways on ba.com, if you have any other cards from any other countries, you can actually make bookings on ba.com.

“Unfortunately, because of the problem we are having with scarcity, the banks in turn have placed limits on the amount, or should I say there is a cap on what you can do with your naira cards and that’s probably the traveling agencies are saying they cannot use anything on ba.com but their dollar cards,” she said.

In his closing remarks, Gbajabiamila disclosed that an expanded meeting will be held on Thursday to enable the ministers of finance, budget and national planning, aviation, the CBN governor and other regulatory agencies to make informed decision.