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Nigeria, 13 African countries owe international airlines $2.2bn –AFRAA

•As continent’s air traffic hits  98.4% in August

By Chinelo Obogo,

African Airlines Association (AFRAA), has revealed that as at end of July, 2023, 14 of 22 countries were owing international airlines $2.2 billion earned from sale of flight tickets compared to $2.274 billion in June.

In an African airlines’ performance update released by AFRAA yesterday, the body, which is a trade association of airlines from the member states of the African Union (AU) with  a membership of 51 airlines cutting  across the entire continent, said it has requested meetings with some central bank governors and will soon meet them to agree on a solution to the recurrent problem as part of engagements to have the funds released.

“The industry’s blocked funds reduced marginally in July to $2.200 billion compared to $2.274 billion in June. Some 22 countries account for the blocked funds globally while 14 of the blocked funds countries are in Africa, accounting for about 70 per cent of total blocked funds.

AFRAA has requested meetings with some central bank Governors and will soon meet them to agree on a solution to this recurrent problem as part of engagements to have the funds released,” AFRAA said.

In May, the International Air Transport Association (IATA) said that blocked funds belonging to foreign airlines trapped in Nigeria had hit $812.2 million, warning that rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets. The top five countries that account for 68.0per cent of blocked funds are Nigeria with the highest trapped funds ($812.2 million), Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million), Lebanon ($141.2 million).

For over two years, many foreign airlines operating in Nigeria shut down their lower inventories because they have been unable to repatriate millions generated from sale of tickets which has been trapped in the country’s banks. IATA said the inability of international airlines to repatriate their ticket sales for over a year and said the blocked funds have contributed to the high airfares on Nigerian routes.

IATA’s Director General, Willie Walsh said, “Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”

President of National Association of Nigeria Travel Agencies (NANTA), Susan Akporiaye, told Daily Sun that an economy class ticket from Lagos to France on British Airways now cost about N1.92million, while Lagos to London cost about N2.15million. However, she said that African airlines have continued to stand in solidarity with the country in the face of the resolution of European airlines to block lower flight inventories.

In the area of air traffic carried by African airlines, AFRAA in its performance report revealed that in August 2023, African airlines reached 98.4 percent of the 2019 level. Domestic market share was estimated at 34 per cent, intra-Africa at 29 percent, and intercontinental at 37 percent.

It said the total number of intercontinental routes operated by African airlines exceeded pre-COVID levels since October 2022. In some major airports (Johannesburg, Nairobi, Addis Ababa, Lusaka, Cairo, Casablanca, Abidjan, and Lomé) intra-Africa connectivity has reached or exceeded pre-Covid level since December 2022.

It said:  “Year 2023 is witnessing a narrowing of the airline revenue gap attributed to Covid-19 compared to 2022. In the first three months of the year, African airlines missed the levels attained in a similar period in 2019 by US$0.3 billion. This is expected to further narrow in the second quarter to US$0.2 billion, according to AFRAA data. Though full-year estimated revenue gap is yet to be computed, it appears 2023 would be a better year compared to the prior year.

“The 2022 full-year cumulative airlines revenue gap was US$3.5 billion for all African airlines compared to 2019. The Jet A1 price continues the upward trend, going up by over $22 in one month. The global weekly average jet fuel price during the week ending 25 August 2023 was up 2.9 per cent at $126.37/bbl. In July, the average weekly price was $103.64/bbl.”

In IATA’s performance report for July, it said African airlines saw a 25.6 per cent traffic increase in July 2023 versus a year ago, the second highest percentage gain among the regions. July capacity was up 27.4 percent and load factor fell 1.0 percentage point to 73.9 percent, the lowest among the regions. For a second month in a row, Africa was the only region to see capacity growth outrun traffic demand.

The total traffic in July 2023 rose 26.2 percent compared to July 2022. Globally, traffic is now at 95.6 percent of pre-COVID levels. Domestic traffic for July rose 21.5 percent versus July 2022 and was 8.3 per cent above the July 2019 results. July RPKs are the highest ever recorded, strongly supported by surging demand in the China domestic market. International traffic climbed 29.6 per cent compared to the same month a year ago with all markets showing robust growth. IATA’s Director General, Willie Walsh said: “Planes were full during July as people continue to travel in ever greater numbers. Importantly, forward ticket sales indicate that traveler confidence remains high. And there is every reason to be optimistic about the continuing recovery.”

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