BY AYOOLA OLAOLUWA
The business of travel agents operating in the country has come under severe pressure from the decision by foreign airlines to block them from accessing their websites to purchase tickets for intended travelers, Business Hallmark has learned.
In recent months, the sector, and with it the entire aviation industry, had faced a very strong threat – the withdrawal of foreign airlines from the country due to their inability to repatriate their funds.
The International Air Transport Association (IATA) cried in June that $464 million (N198.6 billion) in foreign airline money was trapped in the country in June 2021, and appealed to the federal government for the release of funds to help.
Trapped funds, airline industry sources told BH, have since risen as the nation and its economic managers struggled with foreign exchange shortages.
Foreign airlines, unable to repatriate monies generated from ticket sales to their home countries, began suspending operations in Nigeria in August, starting with Emirates Airlines and British Airways.
“We have tried all avenues to address our ongoing challenges in repatriating funds from Nigeria and we have made significant efforts to engage in dialogue with the relevant authorities so that they can urgently intervene and find a viable solution.
“Unfortunately, there has been no progress. As a result, Emirates has taken the difficult decision to suspend all flights to and from Nigeria effective September 1, 2022 to limit further losses and the impact on our operating expenses that continue to accumulate in the market.
“We sincerely regret the inconvenience caused to our customers, but the circumstances are currently beyond our control. We will work to help affected customers make alternative travel arrangements wherever possible,” Emirates Airlines said in a statement.
British Airways also informed its customers about an increase in the cost of their flight tickets.
“Good Afternoon. Please note that BA is switching to full fares for F, J, W and Y seats effective immediately. Please let us issue all outstanding tickets to avoid a fare increase,” the airline advised
Many other airlines including Air France-KLM, Virgin Atlantic, Lufthansa, Swiss Air, United and Delta Airlines were on the verge of suspending operations in Nigeria when the federal government intervened and ordered the Central Bank of Nigeria (CBN) to pay 265 US Dollars to release millions, about 43 percent of the funds trapped.
A breakdown of the funds released shows that $230 million was released as Special Foreign Exchange Intervention, while $35 million was released through the Retail Secondary Market Intervention Schemes (SMIS) auction.
However, a few weeks after CBN announced the release of the funds, several airlines have not received a dime, while major carriers such as KLM-Lufthansa, British Airways and Emirates Airlines have only been able to access 50 percent of their locked funds.
In an effort to generate more funds to cover the shortage necessitated by going to the parallel market to procure foreign exchange, foreign airlines had decided to scrap their low-budget tickets, which previously cost just N300,000 had premium tickets which are now N1.5 million.
Aside from that, many airlines have also banned travel agents from their booking sites to avoid paying them huge commissions, causing several travel agents to go idle.
As a result, several large travel agencies have reduced staff levels, while smaller ones without financial resources have closed.
A leading travel agency headquartered in Ikeja has reduced its workforce by over 60%.
A concerned employee who spoke to our correspondent about the development lamented that of the 11 members of his local church who work at the company, which is owned by an official of his church, only 4 remain.
“More than seventy percent of the workers at the company are members of the Church, eleven of whom come from our local church where the owner, who also serves as chief executive officer, prays.
“At last count, 7 out of 11 have been asked to leave until things get better. The cut was now almost two months in progress. And I was one of the unlucky ones.
“Those that remain are not doing any better, earning only 25% of their salary while expenses such as transport costs continue to mount.
“However, I must state here that management has assured us that they will call us back if the company’s situation improves,” said one of the employees concerned, who spoke on condition of anonymity.
Regarding the development, the President of the National Association of Nigeria Travel Agencies (NANTA), Susan Akporiaye, confirmed that several travel agencies have closed their businesses and laid off their employees because they were unable to sell the exorbitant fares of foreign airlines, which forced many to close.
“Travel agencies use the Global Distribution System and stock has been blocked on this platform and even airline offices cannot issue tickets. Those (airlines) that do not have closed stocks restrict sales to the highest stocks of tickets, which has impacted sales by travel agents.
“Several travel agencies are currently unemployed. It is predicted that if this continues, over three million direct and indirect jobs will be lost.
“These are jobs related to travel, which include hotels, shops around the airport, ground handlers, travel agents, cleaners, tourists, photographers and canteens, among others,” Akporiaye said.
The NANTA boss also said some airlines received none of their money trapped in the country, while others received less than 25 percent of their funds.
She complained that the situation had created distrust between the federal government and the airlines, hence the airlines’ decision to do things their own way, charging exorbitant fares to make up for lost funds.
“Between these choking circumstances, airlines were withdrawing lower onboard inventories and selling at the highest possible opens to cushion their trapped funds.
“Their response, which we could call the ‘High Fare Pandemic’, is aimed solely at Nigeria and Nigerians and cannot be seen where in Africa, even in countries where they also trapped their funds in Nigeria.
“Nigerians have to purchase tickets ranging from three to N4 million naira and will be charged up to N1 million naira to change travel dates, even if tickets were issued before these problems started.
“We appreciate the response to the release of some funds and urge the government to open further windows of engagement. We called for a meeting with all those involved; including CBN, Minister of Aviation, Minister of Finance, Foreign Airlines, Nigerian Civil Aviation Authority and IATA.
“Amid the challenges and exorbitant options for our customers and other traveling public, not ruled out by the threat of job losses and the closure of businesses by most of our members, we clung to our optimism that the federal government would respond,” she enthused.
Meanwhile, the federal government has warned it will not hesitate to sanction any identified non-compliant international airlines selling hard currency airline tickets.
The Aviation Minister, Senator Hadi Sirika, while issuing the warning, advised airlines not to push the nation to the wall, insisting that while the country needs the airlines’ services, the airlines also need the Nigerian market.
“This is a violation of our local laws. You will not be admitted. The great and powerful among them will be sanctioned if caught doing so.
“The NCAA has been ordered to take action. And as soon as we find that an airline is in breach of this, we will definitely take care of it. They blocked travel agencies from entering. They also only provided expensive tickets.
“Our regulators don’t sleep. We have a very vibrant NCAA. Once they find an airline guilty, that airline is dealt with because we need to protect our people. It depends on our agreements; what we have signed, and this is in line with international conventions.
“You should also refrain from writing to us and putting things on social media. They should go through diplomatic channels if they want an answer from the federal government,” said the minister.