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Foreign airlines at breaking point over $792million stuck funds, expansion threatened, may cease operations to Nigeria

The International Air Transport Association (IATA) on Thursday said international airlines whose total funds of $792 million are stuck in Nigeria are getting to a breaking point where they find it extremely difficult to expand their operations both in Nigeria and elsewhere.

The IATA’s Regional Vice President Africa & Middle East, Kamil Al-Awadhi at a media presentation with African journalists at the IATA Global Media Day in Geneva, Switzerland on Thursday called on the Federal Government to take the matter seriously, pointing out that the carriers could stop operations to the country if the government fails to resolve the matter.

The Nigerian government is currently holding the highest amount of airline-trapped funds. the IATA VP listed Nigeria as the country with the highest amount of airlines’ blocked funds at $792m followed by Egypt ($348m); Algeria ($199m); AFI zone ($183m) and Ethiopia $128mn.

While Ethiopia has mapped out a strategy to defray the debt, he said that Nigeria had yet to do anything on its own.

His words, “It is getting to a breaking point for the airlines. They are contemplating stopping operations. Nigeria should look into this to resolve the issue. The airlines don’t have the cash to expand their operations”.

“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. I have not been able to engage with Nigeria’s CBN Governor. He said he would engage with me when he had a solution. He is not promising but I have engaged with the Aviation Minister 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.”

On the state of aviation in Nigeria, the IATA boos said with 25 percent interest on loans, high airport taxes, and insurance premiums which it said was six times more than anywhere in the world, it would be difficult for Nigerian airlines to make a profit.

According to Al-Awadhi, any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines.

He said, “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 is higher than elsewhere in the world, and insurance is six times more expensive than anywhere else in the world.”

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