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Nigeria’s first online travel agent, Wakanow, is said to have resolved the financial debt it owed its trading partner, the International Air Transport Association (IATA), as the former is seen paying its debt in bits to the latter, according to a source.
The online travel portal had earlier faced serious financial challenge that made it unable to meet up its payment obligations under the Billing and Settlement Plan (BSP), a method used in settling of ticket sales and remittances by the industry.
BusinessDay gathers that the reason for this financial crunch was as a result of the economic recession that rocked the nation in 2016, making the country go into its first full-year contraction in 25 years, and triggered acute dollar shortages that stifled the non-oil sector, as Africa most populous nation contracted 0.2 percent to record its worst performance since 1984.
In 2016, international airlines had to cut down frequencies into Nigeria as a result of a slowdown in the number of passengers travelling in and out of the country, resulting from the economic downturn and the high exchange rate.
Emirates, the United Arab Emirate (UAE) flagship carrier, reduced its frequencies to Lagos from two daily flights to one.
Also, a United States carrier, United Airlines and Spanish carrier, Iberia, pulled out of the country.
According to the management of Iberia, “Iberia’s decision to leave Nigeria was in response to the difficult times and the inability of the airline to record high load factor as it used to do. The economic crunch bedevilling the nation had depleted the finances of those who otherwise would travel out of the country on business, tourism or leisure.”
The foreign carriers had cited reasons of dwindling passengers as a result of low purchasing power and difficulty in repatriation of their trapped funds in Nigeria, among others as reasons for their decisions.
Jonathan Guerin, United Airline spokesman, confirmed the planned pull out, saying, “Repatriation has been a significant issue, as has been the downturn in the energy sector.”
Virgin Atlantic had reduced the weekly flights from five times to about three times weekly as a result of the biting forex policy.
Wakanow, in a bid to increase sales, issued out a lot of tickets on credit and even cut down fares. This however did not work well in its favour, as many of the corporate organisations who transacted with the company defaulted in payment for the tickets sold, which was worth billions of naira.
The lengthy recession, which not only hampered general economic activities, ravaged the aviation sector and gave a much steeper blow to the country’s largest travel agency as the online travel agent ran into a huge financial crises one of which was with its global industry regulator, IATA which even threatened to wrench the former off its BSP programme due to unpaid settlements.
However, reliable industry sources have confirmed to BusinessDay on condition of anonymity that the company is gradually clearing off this debt with its trading partners in instalment.
“As it were, Wakanow have settled all the airlines, though I do not know how it managed to settle them whether the bank paid on its behalf or it paid with its money,” a source familiar with the matter said.
Furthermore, “as it stands, the company is making a daily payment to clear up its debt profile with IATA and that is how they are operating, whether it has issues to settle with the banks, that I do not know.”
However, “this does not in any way mean they are no longer in financial turbulence, what I am very sure of is that the bank has paid the airlines whether it had now paid the bank or how it intend paying the bank, time will tell in the next few months but it has settled with IATA and it is on a daily payment,” the source said.
The source for reasons best known to him, refused disclosing the name of the bank that is standing as an intermediary in helping the online agent settle this debt with its global industry regulator.
