• Sunday, June 23, 2024
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Why $19m foreign airlines’ trapped funds in Nigeria are uncleared – IATA

Why compensations on flight delays, cancellations should be shared responsibility – IATA

The International Air Transport Association (IATA) on Sunday disclosed that $19 million are yet to be cleared in Nigeria.

IATA in a statement said this has remained so due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks.

According to IATA, in June 2023, Nigeria’s blocked funds amounted to $850 million, significantly affecting airline operations and finances in the country.

The airlines clearing body stated that 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.

IATA however, stated that asof April 2024, 98 percent of these funds have been cleared, adding that the “the remaining $19 million is due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks.”

“We commend the new Nigerian government and the Central Bank of Nigeria for their efforts to resolve this issue. Individual Nigerians and the economy will all benefit from reliable air connectivity for which access to revenues is critical. We are on the right path and urge the government to clear the residual $19 million and continue prioritizing aviation,” said Willie Walsh, IATA’s Director General.

IATA has reported a 28 percent decrease in the amount of airline funds blocked from repatriation by governments. The total blocked funds at the end of April stood at approximately $1.8 billion, a reduction of $708 million (28 percent) since December 2023.

IATA reiterated the call for governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.

“The reduction in blocked funds is a positive development. The remaining $1.8 billion, however, is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements. Even more importantly, it is a pre-requisite for airlines—who operate on thin margins—to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues,” Walsh said.

He said the main driver of the reduction was a significant clearance of funds blocked in Nigeria, adding that Egypt also approved the clearance of its significant accumulation of blocked funds.

“However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira.”