Trapped funds: Air travelers stranded over forex scarcity

By AYOOLA OLAOLUWA

The decision of foreign airlines to compel Nigerian travellers to buy their flight tickets in dollars has provoked a desperate dash for the scarce greenbacks by intending travellers, Business Hallmark can reveal.

It would be recalled that some foreign airlines flying into Nigeria had on Thursday, April 14, 2022, announced that they would begin the sale of their tickets in dollars on April 19.

According to the APG Interline E-Ticketing (APG IET), an airline servicing firm, the move became necessary due to the difficulty in repatriating airlines funds stuck in Nigeria and other countries, coupled with foreign exchange fluctuations.

Dear travel partners, warm greetings from APG. This is to bring to your notice that with effect from April 19, 2022, GP would only accept issuing of tickets in US dollars and not naira.
This is mainly due to repatriation issues and the forex situation in the country. This would most likely be a temporary measure till the forex situation improves, the firm had said in a travel advisory to its trade partners.

The airlines’ announcement came barely a month after the Minister of Aviation, Hadi Sirika and the Director-General, International Air Transport Association, the global trade body representing over 230 international airlines, Willie Walsh, had implored the Federal Government to facilitate the repatriation of ticket sales proceeds trapped in the country.

Aviation business suffers from issues of foreign exchange by local and foreign airlines and their inability to repatriate blocked funds.

“Nigeria currently holds $283m (about N118.87billion) worth of foreign airlines fund in the country. I humbly ask for the support of the Central Bank of Nigeria through the directives of President Muhammadu Buhari, to aid access of both local and foreign airlines to foreign exchange,” Sirika had begged.

Also, the DG of IATA, Willie Walsh, had argued that the blockade of airline revenues contravened international conventions and could slow the recovery of travel and tourism in affected markets.

“Blocked airlines funds are pretty high in Africa. I think it is about $601m in Africa across 17 countries. It is very much a case of Africa as a continent probably having the most blocked funds around the world,” Walsh said.

True to their words, the foreign airlines, to the chagrin of many intending travellers, effected the “no dollar no flight ticket policy on Tuesday, April 19, a decision that threw spanners in the travel plans of many Nigerians and foreign citizens.

The development, BH learnt, has worsened the challenges experienced by international tavelers who now source forex from the parallel market for their tickets.

Particularly affected, our correspondent learnt, are Nigerian travellers who fly budget airlines like South African Airways, Turkish Airlines, Asky Airlines, Egypt Air, Royal Air Maroc, Middle East Airlines, Rwanda Air and Kenya Airways which fly directly into Nigeria.

Other carriers on the APG IET platform include Fly Dubai, Thai Airways, French Bee, Air Seychelles, Air Algerie, and Air Namibia. Others are Air Panama, Air Burkina, Avianca, Bangkok Airways, Cape Verde Airlines, Hong Kong Airlines, Malaysian Air and Fiji Airways, amongst many others.

Across Nigerian major cities of Lagos, Abuja, Port Harcourt and Kano on Friday, our correspondent gathered that many travelers had to abort their trips abroad due to the unavailability of dollars to purchase flight tickets.

Some of the passengers who spoke with our correspondent lamented the development, urging the Federal Government to quickly intervene.

“I had planned to travel to New York through Kenya Airways on Friday but was shocked when the travelling agency I contacted on Wednesday rejected the naira I presented, insisting that I had to pay for my ticket in dollars.

“A week earlier, the same travel agency had offered me a one way ticket to New York for $733, using the approved airlines rate of $450.

“I decided to use budget airlines like South African, Ethiopian and Kenyan Airlines because they are relatively cheaper. Lufthansa, British Airways and KLM had offered me the same ticket for between $933 and $1,050. But I got the same ticket from Kenya Airways for $200 less.

“When I travelled to the U.S. last year June to visit my children who are in school, the airline had used the exchange rate of N411 to a dollar. But when I was returning in December 2021, the rate had been adjusted to N450 per dollar.

“So, I was expecting to get a one-way ticket for N329,850, using the N450 exchange rate they used in December. Only to be informed that I had to do the transaction in dollars.

“Since banks are not selling foreign exchange to buyers to purchase tickets, I had no option than to go to the black market. Unfortunately, the best offer I got was N595 for a dollar.
“If you mutiply $733 by N595, that gives you N436,135. Can you believe that? That is a difference of N106,850, within a period of four months”, declared Lanre Ojo, a retired civil servant.

Another traveller who will be jetting out of the country to the U.S on a Lufthansa flight on Monday, April 25, Mr. Jude Apantaku, lamented the hardship he faced trying to buy a ticket for the trip.

“Though I had expected that a day like this would come, the announcement, to be frank, was too sudden. It caught people like me unaware.

“Yes, I am aware of the new ticket policy, but I couldn’t act faster because I had expended millions on my travelling plans and needed to source for more money for my flight ticket which is not just sitting there to be plucked.

“In the process of sourcing for funds, the new policy caught up with me. What even annoys me is not the extra money I was made to cough out, but the stress I was made to go through trying to source the money from the black market,” Atanpaku lamented.

BH gathered many Nigerian students returning to school after the Easter holidays are feeling the brunt. Some of the students whose parents are not rich but struggling workers who managed to send them abroad are now trapped in the country, while their parents scramble to source the difference in air fares.

BH checks across major Nigerian cities on April 22 and 23, showed that a dollar exchanged for an average of N593.

For instance, ubiquitous Hausa forex traders popularly called ‘mallams’, sold a dollar for between N588 and N596 in areas visited by BH.

It was observed that dollars sold for far less in Lagos suburbs of Ijaiye, Abule-Egba, Meiran, Ishaga and Fagba, probably because of lesser demands, while a margin of between N3 to N6 a dollar applied in urban centres like Ikeja, Ogba, Allen, Opebi, Maryland and Oshodi.
According to the latest data released by the National Bureau of Statistics (NBS) on Wednesday, the total number of international passengers who passed through Nigerian airports in 2021 were 2,219,146. While the number of arrivals stood at 1,109,621, departure stood at 1,109,525.

The data showed that Abuja, Lagos, Kano, Port Harcourt, Enugu and Owerri recorded the highest rate of traffic. For instance, while Lagos recorded the highest traffic of foreign travels with 1,595,522 passengers, Abuja came second with 565,062 passengers, Port Harcourt had 14,519 passengers, Kano had 39,441 passengers and Enugu had 4,532 passengers.

The 2022 figures were expected to be higher but this dollar policy by airlines may dampen the figures.

A detailed analysis of the figures by BH showed that 184,928 international travellers travelled each month in 2021.

With travellers now paying an average of N100,000 more with the introduction of the new forex policy, Nigerians will be paying extra N18.5 billion on a monthly basis and N223 billion in 2022 if the same figure is applied for the current year.

A Bureau de Change operator, Isa Yayi, who spoke on the development, said Nigerians will spend more to get forex owing to the denomination of ticket sales by foreign airlines in dollars.

“No doubt, the naira will keep falling because the frantic travellers who need dollars cannot get it from the banks. They will have no option than to patronise the parallel market, in the process increasing demand without commensurate supply”, Yayi disclosed.

An aviation expert, Engr. Segun Badejo, warned that the new policy will create chaos for travellers as sourcing forex from banks is very difficult.

“Definitely, airfares will rise as many travellers will have to pay through their noses to get dollars from the parallel market”, Badejo stressed.