Aviation crisis: Travel agencies shut down offices, retrench staff

By AYOOLA OLAOLUWA

The operations of travel agencies operating in the country have come under severe pressure with the decision of foreign airlines to block them from accessing their websites to buy tickets for intending travellers, Business Hallmark has learnt.

In the last few months, the sector and by extension the entire aviation industry had come under a very potent threat-the withdrawal of foreign airlines from the country over their inability to repatriate their funds.

The International Air Transport Association (IATA) had cried out in June that foreign carriers’ funds running into $464 million (N198.6billion) as of June 2021 are trapped in the country, while appealing to the Federal Government to help unblock the funds.

The trapped funds, sources in the aviation industry informed BH, had since increased as the nation and its economic managers grappled with the scarcity of foreign exchange.

Unable to repatriate the funds realised from ticket sales to their home countries, foreign airlines in August began to shut down their operations in Nigeria, starting with Emirates Airlines and British Airways.

“We have tried every avenue to address our ongoing challenges in repatriating funds from Nigeria, and we have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution.

“Regrettably there has been no progress. Therefore, Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective September 1, 2022, to limit further losses and impact on our operational costs that continue to accumulate in the market.

“We sincerely regret the inconvenience caused to our customers, however the circumstances are beyond our control at this stage. We will be working to help impacted customers make alternative travel arrangements wherever possible,” Emirates Airlines had announced in a statement.

British Airways also informed its customers of a rise in the cost of its flight tickets.

“Good afternoon. Please be informed that BA is changing to full fares F, J, W and Y seats any moment from now. Kindly let us issue any pending tickets to avoid fare increase,” the airline advised

Many other airlines, including Air France-KLM, Virgin Atlantic, Lufthansa, Swiss Air, United and Delta Airlines were on the verge of suspending their operations in Nigeria when the Federal Government intervened by instructing the Central Bank of Nigeria (CBN) to release $265million, about 43 per cent of the trapped funds.

A breakdown of the released funds shows that the sum of $230 million was released as special FX intervention, while $35 million was released through the Retail Secondary Market Intervention Schemes (SMIS) auction.

However, several weeks after the CBN announced the release of the funds, several airlines have not received a dime, while big carriers like the KLM-Lufthansa, British Airways and Emirates Airlines have been able to access only 50 percent of their trapped funds.

In an effort to generate more funds to meet the shortfall necessitated by going to the parallel market to source for foreign exchange, foreign airlines, it was gathered, had decided to scrap their low budget tickets which before now cost as low as N300,000 with premium tickets which is now N1.5 million.

Apart from that, many airlines have also locked out travel agencies from their booking sites in order to avoid paying huge commissions to them, leading to several travel agents becoming idle.

As a result, several big travel agencies have reduced their staff strength, while smaller ones with no financial muscles have shut down.

A leading travel agency with head office in Ikeja, it was gathered, has cut down its staff strength by over 60%.

An affected employee who spoke with our correspondent on the development, lamented that out of the 11 members of his local parish working in the company owned by an officer in his church, only 4 are left.

“Over seventy percent of workers in the company are church members, with 11 coming from our local parish where the owner who doubles as the chief executive officer worships.

“At the last count, 7 out the 11 have been asked to leave untill things improve. The pruning had been on for close to two months now. And I was among the unlucky one.

“Those remaining are not faring better as they are earning only 25% of their salaries, while expenses like transportation costs keep going up.

“However, I must state here that the management had assured us that they will call us back when the company’s fortune improves”, said one of the affected workers who spoke on the condition of anonymity.

Speaking on the development, the President, National Association of Nigeria Travel Agencies (NANTA), Susan Akporiaye, confirmed that several travel agents have closed shop and sacked their workers because they were not able to sell the exorbitant fares by foreign airlines, thereby forcing many out of business.

“Travel agents use Global Distribution System and inventories were blocked on that platform and even airline offices cannot issue tickets. Those (airlines) that have not closed inventories are restricting sales to highest ticket inventories and this has affected sales by travel agents.

“Currently, several travel agents are out of job. There is a projection that if this continues, over three million direct and indirect jobs will be lost.

“These are jobs related to travel which include hotels, shops around the airport, ground handlers, travel agents, cleaners, tourists, photographers and canteens amongst others,” Akporiaye stated.

The NANTA boss also said that some airlines have not received any of their money trapped in the country, while others have only received less than 25 percent of their funds.

She complained that the situation has created a distrust between the federal government and the airlines, hence the decision of the airlines to do things their own way by charging exorbitant fares to make up for lost funds.

“In between these strangulating circumstances, the airlines withdrew lower inventories across board, selling at the highest possible openings as a way to cushion their trapped funds.

“Their response which we could describe as ‘High Fare pandemic’, is solely targeted at Nigeria and Nigerians, and cannot be seen where in Africa even in countries where they also have their funds being trapped in Nigeria.

“Nigerians have to buy tickets to the tune of three to N4million naira and are charged as high as N1million naira to change travel dates even with tickets issued before this trouble began.

“We appreciate the response to the release of some funds, we urge government as a matter of urgency to open further windows of engagement. We called for a meeting with all parties involved; including the CBN, Minister of Aviation, Minister of Finance, Foreign Airlines, the Nigeria Civil Aviation Authority and IATA.

“Amid the challenges and exorbitant option for our clients and other traveling public, not excluding the threat to job losses and closure of shops by most of our members, we held on to optimism that the Federal Government would respond,” she enthused.

Meanwhile, the Federal Government has warned that it won’t hesitate to sanction any identified non-compliant international airlines selling air tickets in hard currency.

The Minister of Aviation, Senator Hadi Sirika, while issuing the warning, advised the airlines not to push the nation to the wall, insisting that while the country needs the airlines services, the airlines also need the Nigerian market.

“That is a violation of our local laws. They will not be allowed. The high and the mighty among them will be sanctioned, if they’re caught doing that.

“NCAA had been directed to swing into action. And once we find any airline violating this, we will definitely deal with them. They blocked travel agents from access. They also made only expensive tickets available.

“Our regulators are not sleeping. We have a very vibrant NCAA. Once they find any airline guilty, that airline will be dealt with because we need to protect our people. It is according to our agreements; what we have signed, and this is according to international convention.

“They should also desist from writing us and putting things on social media. They should go through diplomatic channels if they want response from the Federal Government,” the minister said.