$85 Million Trapped Fund: Emirate To Reduce Flight Frequency To Nigeria

By Uche Mbah

Emirates Airlines, the major Airline of choice by Dubai-bound passengers, says it will no longer maintain its current frequency to Nigeria from August 15 because it is finding it difficult to repatriate its revenue from the country.

In a letter dated July 22 and addressed to Nigeria’s Minister of Aviation, Hadi Sirika, and signed by its DSVP International Affairs, Majid Al Mualla, the Airline said the reduction is from 11 flights per week to seven flights per week.

“With effect from 15 August 2022, Emirates will be forced to reduce flights from Dubai to Lagos from 11 per week to 7 per week. We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” the letter read in part.

Emirates had $ 85 million of funds trapped in Nigeria at the Central Bank of Nigeria awaiting repatriation. Every month an additional $10 million is added to the money.

Emirate said the continued accumulated revenue is hurting its operations.

Emirates operates 11 weekly flights to Lagos and Abuja.

Emirates said they “simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post COVID-19 climate. ”

The Bilateral Air Service Agreements (BASAs), of which Nigeria is signatory, stipulates that airline tickets be sold in the host local currency  while the airlines would withdraw the funds in dollars.

In Nigeria, they deal directly with the Central Bank. Emirates, however, proposed a change, where they pay for Aviation fuel and other services in dollars, but were reportedly rebuffed by the CBN.

“This means that not only are Emirates’ revenues accumulating, we also have to send hard currency into Nigeria to sustain our own operation. Meanwhile our revenues are out of reach and not even earning credit interest,” the airline said.

“Your Excellency, this is not a decision we have taken lightly. Indeed, we have made every effort to work with the Central Bank of Nigeria (CBN) to find a solution to this issue.

“Our Senior Vice-President met with the Deputy Governor of the CBN in May and followed up on the meeting by letter to the Governor himself the following month, however no positive response was received.”

They cited the deadlocked meeting between the Airline and the CBN, with the International Air Transport Association (IATA)supervising, which yielded little results.

“Should there be any positive development in the coming days, we will, of course, re-evaluate this decision,” they promised.

Within the past weeks and months, both domestic and International Airlines have been groaning under the increasing cost of Jet A1, with many threatening to halt operations.