Nigerians have been on a spending spree, shelling out a whopping $4.66 billion on foreign air travels within a space of 15 months.
Analysis of the Central Bank of Nigeria (CBN) data between the first quarter of 2022 and the first quarter of 2023 has revealed.
During this time frame, foreign airlines purchased foreign exchange from the Central Bank of Nigeria to facilitate the repatriation of their earnings back to their respective home countries.
The data shows a significant surge over time, with $496.44 million sold in Q1 2022, soaring to $1.03 billion in Q2 2022, reaching $1.36 billion in Q3 2022, followed by $887.17 million in Q4 2022, and finally culminating at $890.3 million in Q1 2023.
This remarkable 79 percent increase between Q1 2022 and Q1 2023 reflects the growing trend of Nigerians seeking international travel experiences.
However, despite the size of the revenue, foreign airlines have encountered a considerable roadblock in repatriating their hard-earned funds.
In March, the International Air Transport Association (IATA) made an impassioned appeal to the Nigerian government to release trapped funds that have accumulated to a staggering $743.7 million as of January, compared to $662 million in December.
However, analysis shows that flying from Nigeria comes at a higher cost compared to other West African countries like Ghana and the Benin Republic.
The discrepancies in air ticket prices have been particularly noticeable for popular routes like Lagos to London, where passengers paid a staggering $3,295 for a one-way economy ticket, while their counterparts from Cotonou International Airport in Benin Republic paid a relatively lower $1,256 for the same journey.
Aviation experts have weighed in on the situation, emphasizing the need for Nigeria to establish at least three flag carriers to compete effectively with international airlines. By doing so, they believe that capital flight could be reduced, and the country could claim a more substantial share of passenger traffic.
As foreign airlines continue to grapple with the challenges of repatriation and airfares soar on Nigerian routes, it remains to be seen how the government will address these issues to sustain the momentum of international air travel while safeguarding the interests of both the airlines and the Nigerian travelers.
Nigeria Holds $783 Million in Blocked Funds, IATA Engages with Government for Resolution
The International Air Transport Association (IATA) reported that as of August Nigeria holds approximately $783 million in blocked funds belonging to various airlines.
This significant financial concern was communicated via an official statement released by the trade association.
Kamil Al Awadhi, IATA’s Regional Vice-President for Africa and the Middle East, has been actively engaged in discussions with the Federal Government in an effort to find a resolution to this pressing issue.
Foreign airlines operating within Nigeria have faced ongoing challenges in repatriating their commercial revenues due to a prolonged shortage of foreign exchange in the country.
The official statement from IATA stated, “Mr. Al Awadhi also held discussions with Nigeria’s newly appointed Minister of Aviation and Aerospace Development, the Honorable Minister Festus Keyamo. During these discussions, he urged the new government to maintain and strengthen consultations with the industry while developing both short-term and long-term solutions to address foreign exchange access issues for both domestic and foreign carriers.”
Highlighting the severity of the situation, the statement said, “As of August 2023, Nigeria accounts for $783 million of airlines’ blocked funds.”
According to the statement, IATA commends the Federal Airports Authority of Nigeria (FAAN) for its commitment to enhancing infrastructure and service standards at Lagos’s Murtala Muhammad International Airport within a twelve-month timeframe.
In related news, IATA had previously raised concerns about safety, security, and passenger service levels at Lagos Airport in the past year.
A recent high-level meeting between IATA and FAAN, represented by Managing Director/Chief Executive Officer Kabir Mohammed, concluded with FAAN committing to expedite improvements in these areas as part of a corrective action plan.
Kamil Al Awadhi, IATA’s Regional Vice-President for Africa and the Middle East, said, “We welcome FAAN’s commitment to upgrade Lagos Airport, which serves as a vital domestic and international hub connecting Nigeria to the rest of Africa and beyond. This strategic focus not only strengthens the aviation sector but also acts as a catalyst for Nigeria’s broader economic and social progress. IATA is ready to provide support and expertise to FAAN to ensure that international standards are met through the corrective action plan. Safety, security, and efficient infrastructure are crucial for a well-functioning air transport system, as is the ability of airlines to access the revenues they generate in Africa.”
Federal Government Reopens D Wing of Murtala Muhammed International Airport
In a bid to address the escalating flight disruptions and enhance the efficiency of air travel, the Federal Government has officially reopened the D Wing of the old international terminal at the Murtala Muhammed International Airport in Lagos.
The move is part of a broader effort to tackle the challenges faced by both travelers and airlines operating in Nigeria.
This challenge emerged following the sudden relocation of foreign airlines from the international terminal of the Lagos airport to an adjoining new terminal that opened in March.
The announcement of the reopening of the old international terminal, which had temporarily closed for renovation, was made by the Minister of Aviation, Mr. Festus Keyamo, on Monday.
According to a statement signed by the Director of Public Affairs & Consumer Protection at FAAN (Federal Airports Authority of Nigeria), Abdullahi Yakubu-Funtua, Minister Keyamo emphasized the government’s unwavering commitment to improving the aviation sector and ensuring passengers enjoy a seamless travel experience.
The statement reads in part, “We are pleased to inform the traveling public that Hon. Minister of Aviation, Mr. Festus Keyamo, has graciously permitted the use of the D Wing of the Old Murtala Muhammed International Terminal to complement the New International Terminal, aimed at facilitating the smooth movement of passengers through the airport.”
Minister Keyamo had originally ordered airlines to relocate to the new terminal starting on October 1, 2023. However, FAAN took the initiative to forcibly relocate the international carriers to the new facility on Wednesday.
The sudden relocation by FAAN coincided with a fire incident that occurred in part of the baggage hall of MMIA on the same day. This incident compelled the agency to evacuate passengers and personnel from the facility.
In response to the situation, Mr. Abdullahi Yakubu-Funtua, the Director of Media at FAAN, stated that the airport fire and other developments affecting power supply had necessitated the abrupt relocation of foreign carriers. He assured the public that FAAN is actively addressing the situation.
The utilization of the D Wing for passenger processing has already commenced, promising improved travel experiences for all passengers.
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