Aviation in Africa: Has The forex crisis driven United Airlines out of Nigeria?

airlines united

… as British Airways re-evaluate Nigerian route
United Airlines, one of the US carriers flying to Nigeria has hinted its customers in the country that it will soon cease flight operations to the country from the 30th of June 2016.

The airlines said the last flight from Houston to Lagos will operate on June 29th, 2016 and Lagos to Houston on June 30th.

The decision to cease operation to the Nigeria may not be unconnected to the forex crisis in the country and the inability of foreign carriers to repatriate funds back to their home country.

According to the International Air Transport Association (IATA), the foreign airlines are unable access about $575 (N201.25 bn) of their funds trapped in the Central Bank of Nigeria (CBN), due to the government’s policy on foreign exchange.

United Airlines stated that it will offer a full refund with all applicable fees waived to wholly unused tickets to customers with departure after June 30th, adding that all refunds will be processed through BSP link.

The airline said it will re-protect customers who commence travel before June 30th to alternative carriers for their inbound trip, saying that PNRs are currently being worked on all and will be queued back to their agency.

The United States carrier said it will work with all customers to clear all outstanding refunds or issues as quickly as possible.

Meanwhile, British Airways is evaluating its routes to Nigeria, adding to the aviation industry pressure on the government as sister carriers Iberia and U.S. competitor United Airlines halt flights to the oil based market as traffic stutters and currency controls delay access to revenue.

baAccording to Bloomberg, the U.K. carrier is struggling to repatriate its share of the $575 million that Nigeria currently owes to airlines globally from tickets sold in the West African nation, said Kola Olayinka, country manager for British Airways’ and Iberia’s parent company, IAG SA.

Madrid-based Iberia halted flights on May 12 to Lagos, Nigeria’s biggest city, “due to very difficult operating circumstances and dwindling passenger numbers,” he said in an e-mailed response to questions.

International Air Transport Association Chief Executive Officer Tony Tyler met with Nigerian Vice President Yemi Osinbajo last week, the lobby group said in a statement Wednesday warned that Lagos could lose its role as a hub to West Africa. United Airlines informed employees on Wednesday last week that it would end flights from the U.S. to Nigeria on June 30 because of a lack of demand and difficulty in collecting payments.

IAG Chief Executive Officer Willie Walsh said last month that Iberia would stop serving Lagos after the low price of oil caused Nigeria’s economy to contract for the first time since 2004 in the first quarter. Limits on dollar repatriation have been imposed by the Nigerian Central Bank as reserves slip to $26.5 billion, the lowest in more than a decade, from more than $30 billion in early 2015.

“Exiting Nigeria is a very big decision” and “not taken lightly” following London-based British Airways’ 80 years of operations in the country, Olayinka said. “I believe very strongly that we will keep evaluating the situation, but I can assure you, BA is very committed to Nigeria.”

The government is assessing the situation while Central Bank governor Godwin Emefiele has suggested a flexible exchange rate regime that would end the naira’s peg to the U.S. dollar, Olayinka said. IAG is awaiting details of the policy “so that we can start the process of rebuilding,” he said.

BA’s reaction
Contrary to media reports, British Airways said it has no plans to stop operations to Nigeria over its $100m trapped in the country.

It stated that publication in the media that the carrier had concluded plans to exit the country was untrue, stressing that it never issued any statement to the media indicating such.
The airline in a statement said it has a long history in Nigeria, having begun operations in the country 80 years ago as Imperial Airways.

It said Nigeria remains a strategic market for the airline, adding that its operations locally are very strong.

According to the airline, “We have not issued any statements at any time indicating that we are on the verge of terminating operations in the country. We will continue daily operations into Nigeria.”

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