$560m trapped fund: Foreign airlines  profiteering persists

There seems to be no respite in the nation’s aviation sector, as foreign airlines turn deaf ears to the directives of Nigerian Civil Aviation Authority, NCAA, refusing to sell dollars in local currency.

This is coming against the backdrop of the airlines’ inability to repatriate over $560 million in air services funds to their home countries over foreign exchange difficulties.

For instance, in Nigeria, foreign airlines collect Naira for their tickets to customers and exchange the same for foreign currencies for their operations. But they have been lamenting their inability to get the exchange executed through the official foreign exchange market due to the scarcity of foreign exchange resources.

In response to their difficulties, the airlines resolve to close down their lower fares inventories to travel agents across Nigeria, denying them access from issuing tickets emanating from other countries into Nigeria in a bid to reduce the rising blocked funds, thus forcing travellers to pay over 300 per cent more on airfares.

Also, the development has led to a huge liquidity leakage in the sector, as travel agents under the aegis of the National Association of Nigeria Travel Agencies, NANTA, lamented over $500 million revenue decline in the last one year as a result of the significant drop in ticket sales.

Travels account

However, Saturday Vanguard findings showed that Nigeria travellers pay as high as N2.2 million for a one-way journey from Lagos to Washington for economy class, and N4.3 million for economy B class tickets with British Airways.

Also, travellers pay over N1.3 million for a one-way journey from Lagos to Heathrow, London and N3.8 million from Abuja to London with Lufthansa.

A traveller who preferred anonymity told Saturday Vanguard that he is currently planning to return to the United States, and he was able to get a return ticket at the rate of N3.9 million.

He said: “Late last year, I was to pay for the same trip a little below N2 million but due to the cost I refused thinking the seasonal thing was responsible for the hike. But at the moment, I was told that if I pay in foreign currency the price will be lesser. Immediately I opted for that offer, the fare changed to N1.7m for the same ticket.”

NCAA yet to sanction erring airlines

Meanwhile, it was gathered that this practice is against the federal government directive through the NCAA, as airlines operating in the country by law are only allowed to collect airfares in local currency.

Saturday Vanguard gathered that the federal government had insisted that no violator, no matter how highly placed, would be spared if caught selling airfares in foreign currency.

According to the Minister for Aviation, Hadi Sirika, “NCAA, had been directed to deal with any airlines willfully breaching the country’s laws in order to protect the interest of Nigerians against reported airlines’ operational malpractices, warning that no violator, no matter how highly placed, would be spared if caught.

“I want to use this opportunity to say that reports are reaching us that some of the airlines are refusing to sell tickets in naira. That is a violation of our local laws, they will not be allowed. The high and the mighty among them will be sanctioned if they are caught doing that.

“NCAA had been directed to swing into action and once we find any airline violating this, we will definitely deal with them. Also, they blocked the travel agents from access. They also made only the expensive tickets available and so on and so forth.

“Our regulators are not sleeping; we have a very vibrant Nigerian Civil Aviation Authority. Once they find any airline guilty, that airline will be dealt with because we need to protect our people. It is according to our agreements, to what we have signed and this is according to international convention.”

Meanwhile, Saturday Vanguard gathered that to date none of the erring airlines has been sanctioned and the development seems to be on the rise.

NANTA turns to FG

Solutions to foreign carriers’ fare profiteering in Nigeria, took a different turn after International Air Transport Association, IATA, brokered intervention seems untenable over the challenges issued by NANTA.

The travel agents’ body had decried that the foreign airlines’ high handiness on the matter had created an uproar among the Nigerian travelling public and also evidently led to the shut down of many travel trade companies and consequent job losses.

Following the rising development, NANTA, visited Nigeria’s Federal Competition and Consumer Protection Commission, FCCPC, seeking guidance and the next line of action over foreign airlines’ high fares and closing of lower inventories to travel agents across Nigeria.

Addressing the FCCPC team led by its Executive Vice-chairman and Chief Executive Officer, Babatunde Irukera, NANTA President, Mrs Susan Akporiaye, stated that the association is committed to protecting its members and their businesses from any form of exploitation and unfair practices from any quarter, hence the visit to the FCCPC for guidance and solutions driven advice on the face-off with foreign airlines over unfair airfare pricing in Nigeria.

“We strongly view from our professional experience and knowledge of fare mechanism, that the reactions of foreign airlines on trapped funds are grossly unfair to the Nigerian travelling public and gravely threaten the survival of NANTA members.

“We request the assistance of FCCPC, and Nigeria travelling public, with remedies to curb the unfair practices in the downstream aviation sector and how best to articulate its position going forward.”

FG wades in

In response to the travel agencies’ complaint, Irukera, commended the NANTA Leadership for their trust and confidence in government-structured competition and consumer protection ecosystem.

“We will study the issues, and engage in necessary interventions, including inviting parties and stakeholders involved.

“We at FCCPC welcome your request for guidance and will do our best to help determine possible steps to solve this problem which affects Nigerians, but we will first put up an investigation team to determine what led to this impasse and possibly infractions against the travelling public,” Irukera added.

(Vanguard)