Experts in the aviation sector say that unless the Foreign Exchange (FX) policies of the Central Bank of Nigeria are reviewed, more airlines may pull out of the country; dealing a blow to plans for Lagos to become a major global air hub.
International airlines are struggling to repatriate about $575 million that Nigeria currently owes them from tickets sold in the country.
Madrid-based Iberia halted flights to Lagos on May 12 “due to very difficult operating circumstances”; United States carrier- United Airlines is also to stop operations into Nigeria by June, while British Airways said late Friday, it was re-evaluating its Nigerian routes largely due to the dollar shortage.
John Ojikutu, secretary general, Aviation Round Table Initiative told BusinessDay that the 25 international airlines operating in Nigeria each has an average of about $20 million dollars stuck in the country.
Ojikutu said this amount can affect the operations of these airlines and could cause more airlines to pull out of the country.
A travel agent who craved anonymity told BusinessDay that since the forex challenge, Virgin Atlantic which often flies at full capacity to various destinations now travel with mostly empty seats.
The source went on to say the weekly flights have been reduced from five times to about three times weekly, as a result of the biting forex policy.
The source noted that if this situation continues, most foreign airlines might have to pull out of Nigeria as Iberia airline did months ago.
International Air Transport Association CEO, Tony Tyler, met with Nigerian Vice President Yemi Osinbajo last week and warned that Lagos could lose its role as a hub to West Africa.
Managing Director of the Federal Airports Authority of Nigeria (FAAN), Saleh Dunoma, earlier this year said that the new terminals at Nigeria’s major international airports in Lagos, Abuja, Kano, Port Harcourt and Enugu, would make Nigeria the hub of aviation in Africa, when completed in 2016.
Dunoma said the completion of the terminals would stimulate robust growth in passenger and cargo traffic.
According to him, “These airports will improve passenger comfort, increase capacity and improve facilitation.”
The FAAN managing directors plans may however turn into a pipedream as policy choices that reduce FX liquidity and Nigeria’s economic slowdown are hurting investors sentiment.
Limits on dollar repatriation have been imposed by the Nigerian Central Bank, as reserves slip to $26.5 billion, the lowest in more than a decade, from more than $30 billion in early 2015.
Growth in Africa’s largest economy contracted in the first quarter of 2016, largely as a result of dollar shortages industries.
The reduction of transport links between Nigeria and the outside world will hurt the country’s economy and reduce consumer choices.
“I often patronise United Airlines when I go to the United States to buy my goods. The airline has been prompt and effective. I was surprised to hear that they are pulling out of Nigeria in June,” Josephine Umor, a frequent passenger with United Airline told BusinessDay.
“I learnt the only airlines that now have direct flights to the United States are Arik and Delta airlines. For me, I think I will have to travel with Arik since Delta airline now collects dollars, while Arik still collects naira which is easier for us who stay in Nigeria to pay,” Umor added.
Wole Shadera, an expert in the aviation sector says the exit of international airlines may result in fewer investments in the country’s aviation sector and loss of aviation jobs, as many airlines may be faced with the option of laying off staff since they are unable to pay overhead costs.
The National Union of Air Transport Employees, NUATE disclosed two months ago that about two thousand (2,000) Nigerian aviation workers may be sacked by foreign airlines.
About 15 million air travellers passed through Nigerian airports in 2015. The figure for 2014 was about 14million. Analysts say this number may reduce by up to 30 percent with the new foreign exchange policy, if it is not reviewed.
“Exiting Nigeria is a very big decision” and “not taken lightly”, following London-based British Airways’ 80 years of operations in the country, Kola Olayinka, country manager for British Airways said. “I believe very strongly that we will keep evaluating the situation.”
IFEOMA OKEKE
