The International Air Transport Association has adduced reasons why airlines operating in Nigeria cannot make profit.
The IATA Regional Vice President, Africa and Middle East, Kamil Al-Awadhi, said this on Thursday.
Al-Awadhi, who spoke in Geneva, Switzerland, also said Nigeria remains at the top of the list of countries with trapped airline funds.
He said Nigeria still has $792 million ticket revenue trapped in the country.
He said at a media presentation with African journalists at the IATA Global Media Day in Geneva, Switzerland that Egypt followed Nigeria in terms of blocked funds with $348 million; Algeria $199 million, AFI zone $183 million and Ethiopia $128 million.
He said while Ethiopia has mapped out a strategy to defray its debt, there has been no firm commitment on the part of Nigeria through the Central Bank of Nigeria.
Al-Awadhi said: “Ethiopia is seeking a way to resolve this issue even though the blocked fund is rising.
“The first step for us to solve these blocked funds is for both parties to engage.
“If parties don’t engage, it is very difficult to move forward.
“I have not been able to engage with Nigeria’s CBN Governor.
“He said he would engage with me when he had a solution.
“He is not promising but I have engaged with the Aviation Minister who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter.
“The airlines in Africa are owed $34 million.
“That $34 million is blocked.
“Depreciation has set in on the money.
“They have already lost $10 million because of depreciation.
“That is not fair for the airlines because they have paid all the dues to the operators of the airports.
“Every due has been paid for.
“They carry Nigerian officials on these flights and they can’t get their money.”
On the viability of airlines operations in Nigeria, Al-Awadhi said with 25 percent interest on loans, high airport taxes and insurance premiums, which he put at six times more than anywhere in the world, it would be difficult to make profit.
He said: “Every airline has its challenges and it depends on where it operates.
“To answer this question, I will use Nigeria as an example.
“Nigeria has two most expensive airports.
“Their fuel is higher than elsewhere in the world.
“And insurance is six times more expensive than anywhere else in the world.
“The interest on loans is 25 percent.
“It is ridiculous.
“It is the highest interest I have ever seen.
“When you set up these airlines, you are already disadvantaged.
“Any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines.
“You can see why it is difficult for African airlines to make profit.
“IATA is identifying why these costs are high and we are trying to tackle them one by one by seeing how they can reduce the costs.
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“We are expecting that the operating costs of the African airlines will be lowered and they can become profitable.
“IATA is identifying why these costs are high and we are trying to tackle them one by one by seeing how they can reduce the costs, hoping that the operating costs of the African airlines will be lowered and they can become profitable.”