The International Air Transport Association (IATA) recently reported that the amount of trapped funds belonging to foreign airlines operating in Nigeria has risen by 12.39 percent to $743,721,097 in January 2023 from $662m in the corresponding period last year.
This information was disclosed through a letter written by IATA’s Area Manager for West and Central Africa, Dr. Samson Fatokun addressed to Hadi Sirika, Nigeria’s Minister of Aviation.
In his writing he urged the minister to intervene and ensure the resolution of this issue as soon as possible due to its severity.
“Moreover, as of January 2023, airlines’ blocked funds in Nigeria have increased to $743.721.092 from $662m in January 2022 and $549m in December 2022.” While highlighting the social-economic impact of the airline-blocked funds in Nigeria, Fatokun said the increasing backlog of blocked funds of international airlines will impact negatively the foreign direct investment in the country, at a moment the country was expecting investment in the concession of some of its major airports.
He also mentioned that the continue trapped funds violate the Bilateral Air Service Agreement, saying that the country was flaunting its contractual obligations by not facilitating the repatriation of the airlines’ funds. Fatokun stated that to mitigate the current crisis airlines were taking drastic steps like reducing the number of frequencies or the number of seats made available for sale in the Nigerian market.
According to him, these mitigation measures will reduce passenger and cargo access to the country. He said, “Going by the law of demand and supply, the reduction of airline inventories in the Nigerian market will lead to the ticket fare increase, which will further burden average Nigerians.”
He further warned that the downstream sector of the aviation industry such as the travel agencies, freight forwarders and ground handling companies will be negatively impacted if airlines were compelled to reduce their capacities, thereby, leading to job losses.