TWO months ago, the International Air Transport Association (IATA) accused the Nigerian government of preventing foreign airlines from repatriating the sum of $450 million (about N188.6 billion) they had earned from ticket sales to their respective countries.
IATA’s Regional Vice President, Africa & Middle East, Kamil Al-Alawadhi, made this known on Sunday, June 19, 2022 during a press briefing, against the backdrop of the opening of its 78th Annual General Meeting and World Air Transport Summit in Doha, Qatar.

Al-Alawadhi said, “We heard that there is a shortage of dollars. It has been a hectic ride. We met with the Vice-President. We will keep checking. This is going to damage the image of the country. We are hoping that it will go down well. The figure is huge.”

The IATA Regional Vice President disclosed that some 20 countries worldwide had blocked airline funds totalling about $1 billion.

Of the money, more than $700 million was tied up in 11 African countries, with Nigeria accounting for the largest amount withheld by any African nation.

One month after, on July 30, 2022, Emirates Airlines reduced the number of its weekly flights from Dubai to Lagos from 11 to seven due to issues of repatriation of its funds.

In a letter addressed to the Nigerian Minister of Aviation, Hadi Sirika, Emirates stated it had been attempting to repatriate the sum of $85 million it alleged was stuck in Nigeria.

“As of July 2022, Emirates has $85m of funds awaiting repatriation from Nigeria. This figure has been rising by more than $10 million every month as the ongoing operational costs of our 11 weekly flights to Lagos and 5 to Abuja continue to accumulate,” the letter read in part.

It said the blocked funds were beginning to affect the carrier’s operating costs, as well as its commercial viability, adding it could not continue to accumulate losses in the face of the challenging coronavirus pandemic.

The issue of airlines’ blocked funds has become a phenomenon in the Nigerian aviation industry, in addition to issues like aviation fuel and issuance of foreign exchange to transact businesses. Already, Air Peace has suspended flight operations from Nigeria to Johannesburg, effective August 22, 2022, citing delayed issuance of South African visas to travellers. Worsening forex crunch and aviation fuel scarcity were adduced as reasons behind the decision.

What is a blocked fund?

A google search describes a blocked fund as any amount realized from foreign operations but is blocked based on regulations imposed by the government of that country.

However, a simple definition is given by the President of the National Association of Nigeria Travel Agencies (NANTA), Susan Akporiaye, as money owed to airlines on credit.

Akporiaye said, “In layman terms, the airlines are selling but are not getting their money. The airlines’ money should be given to them in dollars and not in naira since they are foreign organisations. The Central Bank and the banks are meant to give them their money in dollars.

“It is like buying from my hand on credit and refusing to pay me. If the agreement we have is that you should pay me by month end but I get no payment. Then by the fourth month, you pay me for the first month and leave the other three.”

READ MORE HERE: https://www.icirnigeria.org/explainer-understanding-the-concept-of-airlines-trapped-funds/