IATA warns more foreign airlines may leave unless complaints are addressed
By Jeph Ajobaju, Chief Copy Editor
More foreign airlines may quit Nigeria if the $790 million ticket revenue still trapped in the country is not released soon, the International Air Transport Association (IATA) has alerted Abuja, to the hearing of Bola Tinubu who has been seeking foreign investment since he became President without putting his backyard in order.
IATA Regional Vice President, Africa & Middle East, Kamil Alawadhi, sounded the alert at a media presentation with African journalists at the IATA Global Media Day in Geneva.
He also disclosed Lagos and Abuja airports are the most expensive in the region despite their dilapidated infrastructure, and Nigeria currently holds the most amount of airlines’ trapped funds in Africa.
Nigeria at $792 million is blocking the greatest amount, he stressed, followed by Egypt ($348 million), Algeria ($199 million), AFI zone ($183 million, and Ethiopia $128 million.
Alawadhi said Ethiopia has mapped out a strategy to pay off its debt but Nigeria is yet to do anything about its own.
“Ethiopia is seeking a way to resolve this issue even though the blocked fund is rising. The first step for us to solve these blocked funds is for both parties to engage. If parties don’t engage, it is very difficult to move forward,” he stressed.
“I have not been able to engage with Nigeria’s CBN Governor [Yemi Cardoso]. He said he would engage with me when he had a solution. He is not promising but I have engaged with the Aviation Minister [Festus Keyamo] who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter.”
“The airlines in Africa are owed $34 million. That $34 million is blocked. Depreciation has set in on the money. They have already lost $10 million because of depreciation.
“That is not fair for the airlines because they have paid all the dues to the operators of the airports. Every due has been paid for. They carry Nigerian officials on these flights and they can’t get their money.”
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High operations costs rob African airlines of profit
Alawadhi said with 25 per cent interest on loans, high airport taxes, and insurance premiums six times higher than anywhere else in the world, it would be difficult for Nigerian airlines to make profit, according to reporting by The Guardian.
“Every airline has its challenges and it depends on where it operates. To answer this question, I will use Nigeria as an example.
“Nigeria has two most expensive airports; their fuel [price] is higher than elsewhere in the world, and insurance is six times more expensive than anywhere else in the world.”
“The interest on loans is 25%. It is ridiculous. It is the highest interest I have ever seen. When you set up these airlines, you are already disadvantaged.
“Any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines. You can see why it is difficult for African airlines to make profit.
“IATA is identifying why these costs are high and we are trying to tackle them one by one by seeing how they can reduce the costs. We are expecting that the operating costs of the African airlines will be lowered and they can become profitable.
“IATA is identifying why these costs are high and we are trying to tackle them one by one by seeing how they can reduce the costs, hoping that the operating costs of the African airlines will be lowered and they can become profitable.”