(IATA) Operational Safety Audit
International Air Transport Association (IATA)

The International Air Transport Association (IATA) has said that for over a year, Nigeria has been the country with the highest amount of airline blocked funds in the world and this will affect Foreign Direct Investment (FDI) in Nigeria, the image of a country that does respect contractual obligations as well as reduced connectivity to and from Nigeria and high-ticket prices among others.

These were part of the content of the letter signed by the Area Manager West & Central Africa International Air Transport Association, Dr. Samson Fatokun and delivered to the Ministry of Aviation on Tuesday.

According to the letter as at January 2023, airlines’ blocked funds in Nigeria have increased to $743.721.007 from $662m in January 2023 and $549m in December 2022 with various socio-economic impacts.

The letter read,” The increasing backlog of international airlines blocked funds in Nigeria sends a strong message against foreign direct investment (FDI) in Nigeria.

Potential investors are reading from the plight of the airlines that they would not be able to repatriate their funds from Nigeria, even at this moment when Nigeria is expecting investments in the concession of some of its prominent airports.

It went on stressing that the trapped funds gives, “The Image of a country that does respect contractual obligations. Foreign airlines fly into Nigeria within the legal framework of the Bilateral Air Service Agreement (BASA) signed between their countries and the Federal Republic of Nigeria. It is agreed in those BASAs that Nigeria will facilitate the repatriation of the funds of the other party’s airline. Nigeria flaunt this contractual obligation by not facilitating enough the repatriation of airlines’ funds.

The world airline body also said the trapped funds would lead to: “Reduced connectivity to and from Nigeria and high-ticket prices to mitigate the increasing backlog of their funds in Nigeria and its impact of their cash flow, some airlines have decided to reduce the number of their frequencies, or the number of seats made available for sale in the Nigerian market. This mitigation measure reduces person and cargo access to Nigeria. E-commerce that relies on aviation for speedy delivery will be impacted in Nigeria.

Moreover, going by the law of demand and supply, the reduction of airline inventories in the Nigerian market will lead to ticket fare increase which will further burden average Nigerians and take air travel away from the reach of many Nigerians.

Another impact according to IATA is the loss of jobs especially in the downstream sector,”The downstream sector the aviation industry (Travel Agencies, Freight Forwarders, Ground Handling Companies) relies heavily on airlines capacity to grow or remain in business.”

“Should the airlines be compelled to further reduce their capacity, those businesses would be negatively impacted, leading to job losses. The negative indirect impact will also affect ground transportation (Taxi, car hire), hotels and restaurants output.”

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