Amidst the clamour by foreign airlines to repatriate their trapped funds, amounting to $800m, no fewer than four domestic airlines have over $54m (N43.4bn) trapped with the Central Bank of Nigeria (CBN), Daily Trust can report.
The money comprises foreign exchange forward paid to the CBN and payment for participating airlines in the 2023 Hajj operations.
The CBN had recently commenced clearing the forex backlog with an assurance that the process would continue until all the obligations were attended to.
But the domestic operators are grumbling over the trapped funds they said had stalled their operations as they need dollars for their aircraft maintenance, lease and other obligations.
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Daily Trust reports that four airlines – Air Peace, Azman Air, Max Air and United Nigeria Airlines – are being owed over $50m. While eight other domestic carriers also have their funds trapped, the actual amount could not be ascertained as of press time.
Findings by our correspondent indicated that Air Peace has about $25m trapped with CBN; Max Air over $20m; Azman Air $7m and United Nigeria $3m.
Out of the 12 scheduled commercial carriers, four – Air Peace, Max Air, Azman and Aero Contractors – participated in the 2023 Hajj airlift but their money has not been fully paid.
It was learnt that some of the operators met with the new Chairman of the National Hajj Commission of Nigeria (NAHCON), Alhaji Jalal Arabi, last week to assist in interfacing with the Presidency to facilitate the release of the money.
Our correspondent learnt that Azman Air for instance is expecting the release of the money to bring back three of its aircraft stranded at a maintenance facility abroad.
A source with the airline told our correspondent yesterday that the money was being expected to facilitate the resumption of its domestic operations.
The source said, “We have more than $7m with CBN. You know we have not been paid for our Hajj and we want to use that money to get back our aircraft. The money is trapped in CBN. Max Air has more than $11m. Air Peace has more than $14m.
“All airlines that were engaged in the 2023 Hajj operation have money trapped in CBN. And it would have an adverse effect on our domestic operations because you need the money to take your aircraft for checks and you cannot get that money. We are expecting three aircraft and we still have two on the ground that are yet to go.”
The Chairman of Air Peace, Mr Allen Onyema, in a recent chat with our correspondent confirmed the trapped funds.
“We ferried 15 of our aircraft for maintenance overseas. We needed dollars to pay for the maintenance; so, we paid naira to CBN, which is equivalent to $14 million needed to pay and bring the aircraft back to Nigeria after the checks. We have not received this money.
“This is money we borrowed at a 26 per cent interest rate but six months have passed and we are yet to get this money from CBN. The total debt we expected to be paid to us from the CBN is $24 million. This is why we said what we need is a conducive environment and Nigerian airlines will blossom.
“If these monies are made available to us and other airlines, Nigerian carriers will do very well. Nigerian airlines have the capacity, what we need is support from our government,” Onyema said.
Speaking with our correspondent yesterday, Barr. Shehu Wada, an executive of AON said while the government makes an effort to clear foreign airlines’ trapped funds, the local carriers should not be forgotten.
“We are also suffering with our money trapped in CBN, especially to buy parts and maintain our aircraft. It is not only the international carriers that are suffering, and to me, charity begins at home,” he said.
Speaking with our correspondent, Aviation Analyst, Sindy Foster said, “Local operators have huge challenges in accessing forex in a timely and transparent manner. Majority of airline costs are in dollars and without access to dollars airlines will find it difficult to operate.
“Aircraft sent for maintenance can’t be brought back without payment, lease default due to lack of forex is disastrous for an airline, insurance premiums need to be kept valid, pilot training needs to be kept current, spare parts are a regular purchase – all of which requires dollars.
“Lack of dollars impacts local operators too, so they too will most likely need to charge higher for their tickets to take into account the forex cost fluctuations which they have also been subjected to.”
On his part, the Secretary General of Aviation Roundtable, Olumide Ohunayo, said there was the need to clear the foreign airlines’ trapped funds in order to increase investors’ confidence.
“Whatever money they have with the Central Bank is their own naira that they submitted to the CBN which they bidded for and they are two different things,” he said.
Also speaking, Aviation Consultant, Babatunde Adeniji, said the CBN has criteria for settling FX obligations which must be adhered to.
“When we start bringing in sentiments and using government fiat to bulldoze decisions is when we create distortions that leave us all worse off,” he said.
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