Market News

BY Olasunkanmi Akinlotan

Travel agents in Nigeria are facing challenges due to the recent policy of the Central Bank of Nigeria that limits dollar transactions. These restrictions are impacting their ability to send funds from ticket sales to international airlines.

Travel agents and airline officials said the development is causing concerns in the sector. Recall that during the COVID-19 pandemic, foreign airlines had challenges repatriating their ticket funds due to the lack of dollars.

In 2023, foreign airlines deployed several means to avoid the collection of ticket sales proceeds in naira so as to reduce the amount of money trapped in Nigeria.

At that time, airlines stopped travel agents in Nigeria from issuing tickets emanating from other countries into Nigeria in a bid to reduce the over $744m trapped in Nigeria then.

Almost one year after trapped funds were cleared by the Federal government, some airlines have continued to collect payments in dollars, a development believed to be an infringement on the sovereignty of Nigeria as a nation.

However, to prevent the challenges of repatriating funds, the International Air Transport Association approved the United Bank for Africa as the designated bank for airline ticket funds repatriation from Nigeria.

Also, the Central Bank of Nigeria had in 2023 written a circular to all commercial banks asking them to limit daily dollar withdrawals or transfers to a maximum of $10,000.

In adherence to the CBN directive on withdrawal and trading of foreign currencies, travel agents have been boxed into a corner as they can not entirely repatriate airlines’ daily sales.

The pressure seems to have increased on the travel agents as three major foreign airlines, Emirates, Delta Airlines, and United Airlines, stopped sales of air tickets in naira and insisted that all their ticket sales must be in dollars.

Findings by The PUNCH showed that Delta and United Airlines have it in their Bilateral Service Agreement to sell to Nigerians in foreign currency, and the Nigerian government signed the agreement.

The same was also part of the Nigerian government’s promise to the United Arab Emirates for the airline to return to Nigeria after it stopped flying into the country in 2022.

With these three major foreign airlines now collecting payment in dollars, it puts a strain on the operations of the travel agents who would now have more dollars in their coffers to send to IATA.

Stakeholders have expressed concerns saying that with the enforcement of the current limit, it means more travel agents may default in payment and could risk being blacklisted by IATA.

Experts in the industry blamed the government for allowing foreign airlines to charge ticket fees in dollars. They say it not only places more financial burden on Nigerian passengers, but it also questions the country’s sovereignty as a nation.

The National Association of Nigeria Travel Agencies had in 2024 called on the Nigeria Civil Aviation Authority to stop foreign airlines from selling air tickets in foreign currencies, but the aviation regulator did not.

Speaking with the former President of the National Association of Nigeria Travel Agencies and Managing Director and Chief Executive Officer of Topaz Travels and Tours, Susan Akporaiye, she said the policy has been affecting businesses.

She said, “The Federal Government allowed some airlines to sell their tickets in dollars, and that is what is causing the problems. During the trapped funds issue, which was because we did not have enough dollars to be able to repatriate their funds, they placed a lot of restrictions. When American Airlines began to sell in dollars, we told them that this is not allowed here. You should sell in our local currency. It was then that we were made to know that American Airlines had it in their BASA to sell here in dollars, we learnt they can sell in both currencies.

“The same for Emirates, in the bid to get Emirates to return to Nigeria, information reaching us says, the Nigerian government allowed them to sell in dollars even in Nigeria, even though Emirates doesn’t have any money trapped again.

“Now, there are no more airline funds trapped here in Nigeria, so why don’t they just resume the collection of the naira? Why? So Emirates has joined American Airlines, selling in dollars. Why? These airlines selling in dollars are major airlines.”

Lamenting the CBN policy, she further said, “Now, there are dollars, but the CBN came with their policy of transferring $10,000 in the maximum. And our business is about volume; it doesn’t necessarily mean it is our money, but the cost of the ticket. And you know one business class ticket is between 5000 – 10,000 dollars, so if I sell five business class tickets, that is about $100,000 and I can only transfer 10,000 daily so it will take me 10 days to pay $100,000 to the airline but the airline too shouldn’t complain they put us in this problem by refusing to sell in naira.”

Also corroborating Akporaiye, the Group Managing Director, Finchglow Holdings, Bankole Bernard, blamed the Federal Government for allowing foreign airlines to sell tickets in dollars.

He added that the Nigerian government must be able to take a stand, wondering why the government would yield to the demands of foreign airlines without considering the plight of indigenous travel agents.

The expert in the travel industry said, “Since the Federal Government allowed foreign carriers to sell their tickets in dollars, they created more problems for travel agents and travellers. UBA is now coming to us to say we can only remit a maximum of $10,000 in a day.

“The question now is how many tickets will I sell? If in a day, I sell tickets worth $15,000, what do I do with the remaining five thousand dollars? It means I’ll go into default.

“We pay IATA from UBA. As I speak to you, we already have more sales. If I have to pay $250,000 within 15 days, what happens to the remaining $100,000 that I’ve collected in cash? I can pay over $50,000 into my account, but I cannot withdraw more than $10,000. So, it’s a major problem.

“I can’t just explain why this is happening. Now, a travel agency that has sold $100,000 worth of tickets will need 10 days to remit that money. Once a travel agent doesn’t remit the money within two weeks, IATA will declare him or her a default and stop the agency from issuing  tickets.”

When contacted, the President of NANTA, Yinka Folami, said the executives have opened a discussion with the government on the matter, promising that a solution will soon be arrived at.

“We are in talks with the Federal Government on this matter, it is a clear matter and we both know the implications on trade, economy, and directly on our business, and even on Nigerians. We are talking, and we believe that very soon we will arrive at a solution.”