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Emirates is due to suspend operations in Nigeria next month due to more than £72 million in a booby-trap budget that the country’s government is unwilling to release.
Traditionally a vital market for global traders, Nigeria has recently limited access to foreign exchange for imports and for investors to repatriate their source of income due to a shortage of dollars.
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Emirates bosses had hoped that a behind-the-scenes discussion would help them with stranded remittances – a debt amounting to around $85 million and expanding to $10 million each month due to the operating costs of 11 weekly flights to Lagos and five to Abuja – however, it would seem that the government’s new era of inaction was the straw that broke the camel’s back.
“Emirates has made each and every effort to address our ongoing demanding situations in the repatriation of remittances from Nigeria and has made great efforts to engage with the relevant government in preparation for their urgent intervention to help find a viable solution. Unfortunately, there has been no progress,” the airline said in a statement.
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“From 15 August 2022, Emirates will be forced to operate flights from Dubai to Lagos from 11 a. m. to 7 a. m. the blocking of the budget in Nigeria.
As a result, from Thursday 1 September, all Emirates flights in Nigeria will be cancelled. Clearly concerned about the economic impact, or even the ripple effect this may have, Nigeria’s Aviation Ministry responded by saying it was “working hard” to unlock the trapped funds.
“In the past, Nigeria has demonstrated its ability, will and fairness to solve this kind of problem,” Aviation Minister Hadi Abubakar Sirika told CNN yesterday. “It happened when we took hold in 2015 : there was a lot of budget blocked, around $600 million at the time. It was at a time when the country was in recession and the country’s revenues were falling, but we fulfilled our legal responsibility to pay for all that frozen budget.
“Unfortunately, due to many points and reasons, the budget has accumulated. [The] government is working hard to get those budgets released, not just for Emirates but for all the airlines involved,” he added.
In fact, Emirates may not be the only airline feeling the pressure in Nigeria at the moment. In June, the International Air Transport Association claimed that Nigerian officials were withholding $450 million (£379. 6 million) in profits that had been made by foreign airlines operating in the country. As things stand, Emirates’ debt is only one-twelfth of the total jackpot.
This begs the question: are there UK-based carriers who lately owe Nigeria, and would they also be tempted to take their stuff elsewhere?
British Airways recently flies to the country’s capital, Abuja (ABJ), from London Heathrow (LHR) days a week on a BA0083 Boeing 777 (BA83) service, with a flight time of six hours and 15 minutes. The airline also flies weekdays to Lagos (LOS) from Heathrow on a Boeing 777 (BA75) service, which lands in 6 hours and 35 minutes.
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Meanwhile, Virgin Atlantic has recently operated a service between Heathrow and Lagos on an Airbus A330-300 (VS411/VS412). Virgin calls Lagos one of the “busiest cities in Africa” and is a popular address on the continent.
The smart news is that, at least for now, no airline is cutting its facilities, and a BA source tells us it has no plans to replace its facilities in Nigeria. Virgin Atlantic is also keeping its mouth shut on developments in Nigeria, however, it appears its Lagos service is at the moment.
Whatever your situation, either airline will pay close attention to what Emirates’ resolution may mean for an already turbulent market.
About 90% of Nigeria’s currency comes from oil, but a number of problems, in addition to underfunding and pipeline theft, have prevented the government from releasing the budget owed as temporarily as investors and foreign corporations would like.
Worse, the Central Bank of Nigeria continues to face a plummeting value. In 2020, a sharp drop in dollar revenues forced the bank to devalue its currency (naira) by more than 20%. And just last month, it fell to a new all-time low against the dollar.
Nigeria is arguably just the tip of the iceberg for airlines. Other African countries are reportedly withholding the budget of global airlines lately, adding Algeria ($96 million), Eritrea ($79 million), Ethiopia ($75 million) and Zimbabwe, which owes $100 million. These debts have not been helped through the recent COVID-19 pandemic and have an effect on tourism.
As for the impact this will have on UK-based operators, time will tell. . .
Image chosen via InsectWorld / Shutterstock
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