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Abstract:The Federal Government and the Ministry of Aviation have been encouraged by aviation stakeholders to go outside the box for long-term solutions to address international airlines and the FX situation.
The Federal Government and the Ministry of Aviation have been encouraged by aviation stakeholders to go outside the box for long-term solutions to address international airlines and the FX situation.
The parties under a strategic policy-driven framework, the international air transport sector directly produces enough hard currencies to settle stuck funds held by airlines internally.
They have specifically demanded a review of BASAs with other countries, interlining agreements with local airlines, an audit of foreign exchange incomes, for different currencies in order to save the sector, at least temporarily.
The aviation industry has recently expressed alarm over the stranded funds from international airlines in Nigeria, which were estimated to be worth $464 million as of July. With effect from September 1, 2022, a number of airlines, notably Emirates airline, have told the government and their customers that they want to stop operating in Nigeria.
Exits of international carriers, 80% of the GDP's revenue from commercial aviation, will hinder the sector's expected growth and cost Nigeria $1.36 billion (or N567.12 billion, at $/N417) annually.
Nigeria is in a foreign exchange bind, according to Group Capt. John Ojikutu (rtd), Secretary General of the Aviation Safety Round Table Initiative (ASRTI), because the country didn't adapt or plan its programs to store money for bad times.
In addition to the estimated $1 billion in annual revenue from aviation services and fees, Ojikutu questioned the aviation policies that permitted international airlines to fly without reciprocity or interlining with local carriers.
“First, when we signed the BASA agreements with them, how did we expect to return the foreign airlines' earnings?” he questioned. How did we come to provide international airlines outside of the BASA without taking local markets and domestic carriers?
What purpose did it serve to revoke the commercial agreements reached outside of the BASA? What have we done with the more than $1 billion in profits from services rendered to foreign airlines by private and public service providers?
These are independent decisions made without support from the government, and we will undoubtedly lose money from the public and private sectors.
The consequences of international airlines leaving Nigeria, Ojikutu continued, are grave. The Passenger Service Charge (PSC), landing and parking, navigational charges, ground handling services, cargo service charges, 5% ticket and cargo sales charges, fuel charges, and other fees would result in losses.
Because of our lack of forethought, our neighbors, which could end up becoming new hubs in the sub-region, will produce all of these.
Ojikutu advised the competent authorities to stop giving foreign airlines several destinations and replace them with multiple frequencies to Lagos or Abuja and one other airport in a different geographic region.
They (foreign airlines) must be made to be interlined with domestic airlines on domestic routes for their transiting passengers to their local destinations, and they must be made to pay in dollars for the interlining flights. also applies to cargo services. Airlines can be used to produce more foreign currency. The Central Bank of Nigeria (CBN), where the recurring exchange can be paid or supported for the repatriation of the foreign airlines' earnings, shall be the domicile of such foreign exchange.
The government must request that the private sectors that have been collecting foreign exchange gains from these international planes and ships in the marine services, bring their forex revenues home. If they fail, the government would take back any money it gave them in foreign transactions or their certificates of incorporation will be revoked, the official said.
The National Union of Air Transport Personnel (NUATE) secretary general Ocheme Aba thought that the exit warnings provided by foreign airlines constituted a threat to Nigerians way of life for thousands of these personnel.
However, we sincerely beg that you persuade the Federal Government to take extraordinary efforts to clean up the mess given the evident calamity that would definitely befall the nation if the situation is not remedied quickly. Such a step may entail using crude oil swaps to at least partially offset the backlog, the official said.
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