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Business & Finance

Forex Scarcity: 14 Foreign Airlines Exit Nigerian Aviation Market

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The scarcity of foreign exchange in Nigeria has crippled 14 airlines as the economy continues to plummet.

Fourteen (14) airlines have withdrawn their services from Nigeria due to the negative effects of the new forex policy that has led to the scarcity of dollars and fall of the naira.
According to The Guardian, the airlines are among the 50 that operated the Nigerian routes some months ago. Some of those listed are Spanish-owned Iberia airlines, United Airlines and Air Gambia among others.

The airlines were also said to lost about N64 billion in the wake of the new foreign exchange (forex) policy of the Central Bank of Nigeria (CBN).

Speaking on the issue, president of the National Association of Nigeria Travel Agencies (NANTA), Bankole Bernard, said the new forex policy and economic recession came with enormous negative effect on travel agencies and airlines. Bernard, who spoke at the Aviation Round Table (ART) breakfast meeting held in Lagos recently, said there was fear that more airlines might quit flying the Nigerian routes.

He also revealed that some travel agencies are already considering relocating to Ghana, where “their policies are consistent.” He blamed the current administration for its inconsistent policy particularly on the naira devaluation, saying it accounted for the current “nightmarish” experience airlines and travel agencies are facing.

The loss of N64b by the foreign airlines was on account of repatriating $800 million stuck in the economy in the last one year, but released after the recent devaluation of the naira. With the devaluation, the accumulated $800million from airlines’ sales of tickets when the exchange rate was still at N197 to $1, was taken out of the country at the new rate of N320 to $1. Consequently, a substantial amount was lost in the last couple of weeks.

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Also speaking on the issue, the regional manager of British Airways, Kola Olayinka said that for every $1m repatriated since the new policy began, the airlines lose not less than N80 million. He said the immediate and unfortunate effect of the new policy is affecting all foreign airlines that had funds sitting in the Nigerian banks. President Muhammadu Buhari administration last year introduced a fiscal policy through the CBN, restricting access to foreign exchange and funds transfer out of the country.

The policy has affected the International Air Transport Association (IATA) members with estimated $600 million belonging to operators in Nigeria stranded. The association has since appealed to government to ensure the immediate release of such funds to operators in the Nigerian aviation sector.

Meanwhile, ART President, Gbenga Olowo, said some airlines lost up to 50 per cent of their funds due to the forex policy. He appealed to government to be consistent in its policy and ensure that foreign airlines operators have an enabling environment.

The CBN on Wednesday, June 15, officially announced a new foreign exchange policy. According to the CBN, the Nigerian currency has been floated, hence there will be a single market for acquisition of the foreign currency.

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