Some foreign airlines under the IATA have been in a running battle with the Nigerian government over the inability to repatriate $464 million revenue out of the country in line with the Bilateral Air Service Agreement.
Local airline operators under the aegis of Airline Operators of Nigeria (AON), have spoken on the trapped funds of foreign airline operators in Nigeria.
AON made its position known on Monday during a meeting between its members and the International Air Transport Association (IATA).
The meeting was convened by the leadership of the House of Representatives on the trapped funds crisis.
Background
Some foreign airlines under the IATA have been in a running battle with the Nigerian government over the inability to repatriate $464 million revenue out of the country in line with the Bilateral Air Service Agreement.
In August, IATA criticised the Nigerian government after Emirate Airlines threatened to suspend all flights to and from Nigeria over the company's inability to repatriate $85 million.
Following the threat, the Central Bank of Nigeria announced the release of $265 million through the special FX intervention to all foreign airlines in the country to offset their outstanding trapped funds from ticket sales.
House intervention
Obiora Okwonkwo, the managing director of United Airline, who spoke on behalf of the indigenous airline operators, said Nigeria is currently facing FX crisis, therefore, foreign airlines should convert their funds through the Investor and Exporter window (I and E) of the CBN.
He stated that the CBN cannot be giving foreign airline operators access to the official FX rates while local operators have to source FX through the I and E window. He added that foreign airlines that are operating in Nigeria must comply with Nigerian laws.
Mr Okwonkwo stated some foreign airlines are charging Nigerians higher than most other countries despite the access to the official rates. He noted that if local operators are supported by the government, they will end the discriminatory pricing and capital flight.
He stated that the government did not block the funds of the foreign airline operators, rather the government has not made special FX arrangement for them at the official rate.
"The money is in the account, they have access to it. It is in naira and they can use it as they please, including investing in Nigeria if they wish. But we understand that the policy of Nigeria is simple. Nigeria is going through some crisis because of our earnings which has dropped. There is the I and E window.
"We local operators have been referred to the I and E window. We want to know why the foreign airlines... we want to know at what rate to a dollar they are converting their tickets," he said.
But speaking on behalf of IATA, Samson Fatokun, said the Nigerian government has a contractual obligation under BASA to allow foreign airlines to repatriate their funds in US Dollars, adding that foreign airlines are mandated to sell tickets in naira based on government official rates.
He disclosed that $700 million is currently trapped and that the country has the largest trapped funds in the world accounting for 32 per cent of all trapped funds in the world.
Mr Fatokun said such a situation has given the wrong signal to prospective investors about Nigeria.
"The foreign airlines, they trade in naira and they need to repatriate their funds to their countries to take care of operational charges. Ninety-nine per cent of their costs are not based in Nigeria. By law, we demand that they trade in naira. In the bilateral air agreement between the foreign airlines and Nigeria, there is a clause there that each country will support the airlines in the repatriation of their funds.
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"These are contractual obligations that have been signed. As of today, after the CBN intervention of August 29, we have about $700 million in blocked funds. This is astronomically high and it is the highest in the world. There is no country in the world that has that amount of blocked funds. Nigeria accounts for 32 per cent of the trapped funds in the world. That is 1/3 of the total blocked funds in the world," he said.
Following the argument, the Speaker, Femi Gbajabiamila, said the heads of relevant government agencies ought to have been at the meeting. The ministers were attending a retreat at the time.
Meanwhile, the speaker appealed to the representatives of Emirates Airlines to grant some concessions as a sign of good faith.
But in response, Mr Fatokun said the representatives of Emirates Airlines cannot give any commitment at the meeting.
The meeting was adjourned to Thursday.
