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Respite as Foreign Airlines Resume Repatriation of Funds in Foreign Currency


News » Business
Nigeria

IMAGE: British Airways »

January.15.2016

Foreign airlines that operate into Nigeria can sell tickets in Naira and repatriate in their own currencies following the lifting of ban stopping commercial banks from accepting cash deposits of foreign exchange from customers.

The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, who announced the decision in Abuja on Monday, said the new directive took immediate effect.

The ban on payment of foreign currency to domiciliary accounts and transaction in foreign currency in Nigeria had adversely affected the foreign carriers as much of their transactions were in foreign currency.

THISDAY learnt that international carriers generated billion of Naira in local currency but could not repatriate same to their home countries due their inability to exchange them to local currency. This prompted some of them to contemplate reducing their flights to Nigeria and also streamlining their cargo airlifts and other services. But with the restoration of foreign currency account, some of the airlines that had planned to reduce their flights may suspend the idea.

But while foreign airlines lamented their inability to move their funds to their home countries, many stakeholders expressed satisfaction with the policy, which was able to have hamstrung the fiscal operations of these airlines.
But travel expert, Ikechi Uko told THISDAY, Tuesday that these airlines operate in other countries, guided by the regulations, which also dictate their operations in Nigeria, adding that fund repatriation is a norm in the air transport industry; although each country has its rules of engagement with the airlines.

Citing Nigeria’s slowing economy amid scarcity of foreign exchange, international airlines threatened late last year to reduce flights to the country.

The airlines were aggrieved that they could not exchange billions of revenue in Naira in their possession to dollars and repatriate to their various countries because of the then fiscal policies of the Central Bank of Nigeria.

The International Air Transport Association (IATA) had on behalf of the foreign carriers, appealed to the Governor of CBN and Minister of Transportation, Chibuike Amaechi to intervene in the matter and make dollars available to the airlines.

THISDAY gathered late last year that from March 2016, British Airways would reduce its flights to Nigeria by bringing in aircraft with smaller capacity than the traditional Boeing 747, which operates the lucrative Lagos-London route.

It was also gathered that other foreign airlines may either change their aircraft type and operate ones with smaller capacity or reschedule and reduce the number of flights to Nigeria and those which have not been recording high load factor in the Nigerian route may stop flights to the country.

But Uko noted that airlines like British Airways and other major international carriers, including Air France, KLM, Lufthansa and others would find it difficult to stop operation in Nigeria. He recalled the experience when there was foreign exchange restriction under the Late General Sani Abacha, when even BA was suspended from operating into the country, the British carrier had to do everything possible to continue to operate into Nigeria.

“At the height of Abacha regime, when there was foreign exchange restriction on airlines taking away money out of the country in addition to the banning of BA, do you know how much power BA mobilized to get back to Nigeria despite the fact that it was difficult to get money out of the country? So that tells you the real situation. When there was really imposition of foreign exchange restriction BA went to the depth and the limit of negotiations to be able to get back into the game, they did everything within their power to get back into the game. So I do not see a situation where any airline, unless the airlines is already struggling, no airline is going to pull out of Nigeria because of foreign exchange restriction, they will find a way round it. We had a worse-case scenario during the Abacha years and they still were here, they didn’t go,” Uko said.

Also the Marketing Manager, East and West Africa, Delta Air Lines, Bobby Bryan described the foreign exchange restriction then as a problem but noted the airline would get round it.

Bryan expressed optimism about the Nigerian air travel market and noted that despite the current economic downturn, the market would continue to flourish.

Bryan said Nigerians have resilient spirit and no matter the challenges they do not give up; rather, they continue to strive to succeed and that explains why passenger traffic rebounds quickly whenever there is a downturn, adding that Nigerians travel a lot.

“Africa is the future and Nigeria is the future of Africa. For me, even when there are challenges here, and we had seen more difficult times, whatever they may be, the Nigerian market always shows resilience. People want to fly here; they are doing business, they are going to school, they are trading; they are travelling for fun and to see their family members. Even at the challenging times, the demand for travel in Nigeria is always strong.

“In some other countries demand goes up; demand goes down but in Nigeria there is always demand. Of course people have had time with the forex right now. You find it a bit of challenge but Nigeria as a market always find a way to bounce back and we know and that is why we say we are not going anywhere, we are here to stay because we know the market always comes back,” Bryan said.

 

Article Credit: ThisDay

Updated 2 Years ago
 

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Tags:     Dollar     Foreign Exchange     CBN     Airline     Aviation     Godwin Emefiele

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