The International Air Transport Association (IATA), a trade group representing international airlines headquartered in Geneva, has voiced concerns about the possibility that foreign airlines doing business in Nigeria could lose up to $200 million due to depreciating exchange rates.
According to the Regional Vice-President of IATA for Africa and the Middle East, Kamil Al Awadhi, the depreciation of the naira against the dollar is worsening the problem of trapped funds. He made these remarks during a CNBC.
Naija News reports that the IATA Vice President’s remarks were made in light of the $700 million in international airline ticket income that is reportedly still stuck in Nigeria.
Last week, the Central Bank of Nigeria (CBN) announced that it had paid all verifiable debts owed to foreign airlines. However, IATA responded quickly, stating that foreign carriers operating in Nigeria were still owed more than $700 million.
Local travel agents in the nation have requested that international airlines list reduced fares in their inventory or risk dire consequences.
However, in a statement last week, the IATA VP asked that the CBN be required to pay all outstanding ticket income held within the nation.
He warned in a statement that “Airlines should not be unfairly penalised by the lower exchange rate.”
However, in the interview with CBNC, AlAwadhi said, “You also have to take into consideration the blocked funds and the fair value of the blocked funds. If you have $720m blocked and then you devalue the naira by 30 per cent, you have wiped out over $200m of airlines’ money, and they have to compensate for that.
“Airlines have lost a lot of money operating in and out of Nigeria, and it continues to be so under the current environment.”
In recent weeks, the value of the naira in relation to the dollar has plummeted.
At the official market, the naira recently fell from roughly 900 to over 1,400 to a dollar.
