Cost Of Operating Airlines In Nigeria Is One Of The Highest In Africa-IATA

The regional Vice-President for Africa and the Middle East at the International Air Transport Association (IATA) Kamil Al Awadhi, has stated that the cost of operating airlines in Nigerian airports is one of the most expensive in Africa.

This was disclosed during an interview on CNBC Africa where he stated that contrary to reports in the media, international airlines in Nigeria still have around $720 million in trapped funds.

Mr. Kamil was reacting to questions bothering on the cost of air tickets in Nigeria where he stated that airlines continue to lose money operating in and out of Nigeria.

  • According to him, “Airlines have lost a lot of money operating in and out of Nigeria and it continues to be so under the current environment. As things improve, then the airlines will start generating something then there is less risk and obviously, these costs will go down.
  • “You have to remember the cost of operating is one of the most expensive in all of Africa, the charges are definitely going to be more expensive.
  • “You also have to take into consideration the blocked funds and the fair value of the blocked funds. If you have $720 million blocked and then you devalue the naira by 30%, you have wiped out over $200 million of airlines’ money, and they have to compensate that”

The IATA V.P. also noted that the CBN has repatriated only about $65 million of the blocked funds owed to airlines but has been in regular communication with the airlines unlike it was during the previous administration.

What you should know

  • According to the National Bureau of Statistics (NBS) in its transport report for December 2023, the average cost of air transport rose by 87% between December 2022 and December 2023. However, the devaluation of the naira has seen air transport increase significantly over the last few months.
  • In recent times the Central Bank of Nigeria (CBN) has been gradually clearing the backlog of forex obligations owed to international companies operating in Nigeria. The Governor of the CBN had announced during an interview that the bank had successfully cleared around $2.3 billion of forex obligations and only $2.2 billion of valid forex claims remain.
  • International airlines operating in Nigeria had earlier claimed to have around $813 million trapped in Nigeria- a figure that is one of the highest in the world. However, the CBN has in recent times announced the disbursement of around $62 million as part of settling the backlog.

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