From April 19, 2022 airlines on APG Interline Electronic Ticketing Agreements (IET) GP code 275 will start issuing tickets in US Dollars and not in Nigerian currency (Naira). This new policy according to the group is a result of the difficulty in repatriating airlines’ funds stuck in Nigeria and other countries. Coupled with foreign exchange, APG IET gives travel agencies the facility to issue a much wider range of airlines and flight combinations than would otherwise be available via GDS.
APG IET allows travel agencies to ticket a wide range of airlines not present on the local BSP and flight combinations with airlines where no interline agreements exist.
Airlines on APG IET
Notable carriers on the APG IET platforms, aside from other global channels are South African Airways, FlyDubai, Kenya Airways, Middle East Airlines, Royal Air Maroc, Rwandair, Thai Airways, Turkish Airlines, French Bee, Egypt Air, ASKY, Air Seychelles, Air Algerie, Air Namibia.
APG in its travel advisory to trade partners and a copy made available to AirInsight entitled, APG IET: Restrictions of Sales in US dollars, says, “Dear travel partners, warm greetings from APG. This is to bring to your notice that with effect from April 19, 2022, GP would only accept issuing of tickets in US dollars and not Naira. This is mainly due to repatriation issues and Forex situation in the country. This would most likely be a temporary measure till the Forex situation improves. Our sincere apologies for any inconveniences this may cause you and your business. Thank you for understanding”.
This may come as a huge blow to travelers as sourcing foreign exchange from banks has become a herculean task; a situation that may have led to high fares as many can only resort to the black market to source foreign exchange at an exorbitant rate. Investigation shows that airfares, especially in Business Class, among foreign airlines have almost doubled. A Business-class ticket on British Airways and Virgin Atlantic has risen to between N2.7Million and N2.8 million from N1.8Million and N1.9 million. A travel agent who confirmed the development said the carriers sell the cheaper classes only if they are available. He noted that airlines are selling higher so they can meet the demand of repatriating money home with a profit.
Nigeria is said to hold $283 million (about N117.6 billion) worth of foreign airlines’ funds. The funds are proceeds from sales of foreign airlines’ tickets trapped in Nigeria. Aviation Minister, Hadi Sirika made the disclosure during the commissioning of the new international terminal of the Murtala Muhammed Airport, Lagos last month. The $283 million (N117.6 billion) foreign airlines’ trapped funds are significant but a sharp reduction from $800m trapped in the Central Bank of Nigeria (CBN) four years ago. According to the Minister, the sector needs the support of the CBN through the directives of President Muhammadu Buhari, to aid access of both local and foreign airlines to foreign exchange.
Sirika said, “Aviation business suffers from issues of foreign exchange by local and foreign airlines and their inability to repatriate blocked funds. Nigeria currently holds $283 million worth of foreign airlines fund in the country. I humbly ask for the support of the Central Bank of Nigeria through the directives of President Muhammadu Buhari, to aid access of both local and foreign airlines to foreign exchange”.
In line with the Bilateral Air Service Agreements, airline tickets are mostly sold in Naira while the airlines would repatriate the funds in US Dollars through the country’s central bank. The Federal Government under President Muhammadu Buhari’s administration in 2018 cleared $600m in blocked funds but the figure began growing again. IATA Director-General Willie Walsh recently said the blockade of airline revenues “contravenes international conventions and could slow the recovery of travel and tourism in affected markets as the airline industry struggles to recover from the COVID-19 crisis.”
Blocked funds high in Africa
According to Walsh, “Blocked airlines funds are pretty high in Africa. I think it is about $601 million in Africa across 17 countries. It is very much a case of Africa as a continent probably having the most blocked funds around the world. We can see that it is a temporary blockage to get the funds repatriated. In Africa, there are a number of countries that have seen funds persistently blocked and it affects the decisions of the airlines to serve these markets it is important for governments to understand the impact it can have on airlines, especially on passengers that have fewer choices. People need to get access to markets”.