Naira Devaluation Cost Foreign Airlines N6.4billion

Foreign airlines operating in Nigeria lost N6.4billion in the N157.6 billion ($800) of their revenues trapped in the Central Bank of Nigeria, CBN, when the Naira was devalued from N197 to N280 by the apex regulator.

The Country Manager of British Airways, Kola Olayinka, who disclosed this, explained that the total amount of money trapped in CBN before the devaluation was $800 million and for every $1million the airlines lost N80million.

He made this known on Wednesday during the Aviation Round Table (ART) Breakfast Meeting in Lagos. He explained that the fares Nigerians pay for international destinations have increased because more naira is exchanged for dollars, but passengers still pay the same fare in dollar denomination, Thisday reports.

Olayinka said that the economic downturn and scarcity of the dollar are bringing uncertainties in the Nigerian economy and have affected every business done in Nigeria and in the entire economy.

“Dollar scarcity is bringing about uncertainties to all businesses. $800m was in our banks that needed to be transferred. We were selling for N197, when it went up to N285. For every $I million, we lost N80 million,” he said.

Olayinka said the devaluation and the trapping of airlines funds eroded their finances and led to their adjustments in order to survive, while some of the airlines were forced out of the Nigerian market.

He said: “Some of the airlines could not survive. There were a lot of readjustments. BA readjusted by flying Boeing B777, Virgin Atlantic moved to Airbus A330, in a bid to readjust the seat capacity. The fare $1,000 was not changed. The airlines have not increased the fare, the dollar did. Bring 10 more airlines they will fill up with passengers, that is our strength and we should be proud of ourselves as Nigerians.”

The BA Country manager, however frowned at the exploitative fares charged Nigerians saying, while Nigeria has high passenger traffic, Nigerians still pay more to travel.

He said:“They need to fill up the aircraft at the right price. We need to compete effectively and friendly. We need to compete in a way that we are not hurting the consumers.”

It is not in our interest to earn excess monies that sits with the CBN and is going nowhere, what is the point of doing the business? There is multiple unemployment, some agencies and airlines have rationalised. If we sent people away, there will be no job and the multiplier effect, if we start bringing in less people, what will happen to hotels, taxi drivers, and immigration? Government will also be losing monies. All airline operators are task collectors for government,” he stressed.

Olayinka said government collects $20 for every single passenger that passes through the airport security, $50 for every single passenger that passes through the airport.