There is pressure on foreign airlines operating into the country to release lower ticket inventories following the decision of the Central Bank of Nigeria (CBN) to clear substantial parts of their blocked funds.
The National Association of Nigeria Travel Agencies (NANTA), while commending the CBN, said the airlines must reciprocate by allowing accredited travel management consultants to book cheap fares on their websites.
Daily Trust reports that following the crisis over the trapped funds, many airlines restricted travel agents and passengers from issuing low economy tickets while only premium and business class tickets were displayed.
Over time, Nigerian passengers lamented over the high cost of international air fares; forcing many of them to travel to neighbouring countries to connect international flights where tickets are very cheap.
A recent report by Daily Trust indicated that virtually all the neighbouring countries enjoy far cheaper air fares than Nigeria despite the high travel demand.
Following the payment of an additional $64.44m of verified claims owed to foreign airlines operating in Nigeria, NANTA, through its President, Mrs Susan Akporiaye, said with the payment the International Air Transport Association (IATA) should prevail on foreign airline operators to immediately release all lower inventories latest by Friday, February 2, 2024.
She added that anything short of a full release of inventory by all airlines would be described as “unexplainable, unreasonable, unjustifiable and unsupportive actions of airlines in the Nigerian market.”
Akporiaye further stated that NANTA was concerned with the increasing Return on Equity (ROE) and the impact of skyrocketing ticket costs on the business of its members.
She said: “About three months ago when NANTA advocacy and media outings were high on the exorbitant fares by airlines, IATA approached the leadership of NANTA and asked us to please hold fire and engage a collaborative approach to urge the government/CBN to clear outstanding of trapped funds to airlines. In the interest of our businesses and quick resolution, we agreed. NANTA agreed and did a joint letter with IATA to CBN.
“Happily, CBN has kept to the commitment made and cleared all queued payments (backlog) to airlines in one week as announced on Tuesday, 30th January, 2024; one week earlier than promised. We commend CBN for responding to NANTA’s plea.
“NANTA, therefore, holds a firm position that, with ROE (rate of exchange) at N1,421 and backlogs cleared by CBN, airlines have no further reason and justification to restrict inventory in the Nigerian market.”
Stakeholders express mixed feelings
Speaking with our correspondent, the General Secretary of Aviation Roundtable, Mr Olumide Ohunayo, said, “I support the NANTA demand. NANTA worked together with IATA to see that the trapped funds were released and they got commitment.
“Now that the funds that have been trapped in CBN have been paid, though not all in the accounts have been paid, the government has shown that we are ready to reconcile and correct all their anomalies in the past.”
On her part, Managing Partner, Avaero Capitals, Sindy Foster, said the airlines chose not to sell lower fares because of the delay in remittances.
Foster said, “It would be better for NANTA to advocate for payment of the trapped funds without further delay or for compromise agreements to be put in place which limits the forex exposure.”
Analysts laud CBN
Meanwhile, some financial analysts have commended the CBN for its commitment to clearing the forex obligations.
The Head of Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi, said the clearance of the trapped funds and FX forwards would improve the value of the naira and boost investors’ confidence.
He said, “To be fair to the current CBN management, they have been trying their best and they have been trying to clear the backlog of FX demand and matured FX forwards and they have been trying to get them paid.
“If you are owing someone and you need additional money, no one will give you because you have defaulted in the first one. So, we need to clear that and that will give a good signal to foreign investors to bring in their funds into the economy.
