Emirates Pulling Out Of Nigeria Over Blocked Funds

Emirates Pulling Out Of Nigeria Over Blocked Funds

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Emirates will be pulling out of Nigeria shortly, even though this has historically been a pretty lucrative market for the airline.

Why Emirates is ending Nigeria flights

Nigeria has historically been a pretty big market for Emirates, as the Dubai-based airline flew to both Abuja (ABJ) and Lagos (LOS). Nonetheless, the airline is preparing to discontinue Nigeria flights as of September 1, 2022. The reason? The carrier’s inability to repatriate funds.

The country has been restricting access to foreign currency due to a shortage of dollars. Nigeria gets a vast majority of its foreign exchange from oil, but that industry has been struggling lately for the country, due to pipeline theft and chronic under-investment.

Emirates has $85 million stuck in Nigeria that it has been unable to repatriate, and that amount is growing by roughly $10 million per month. The airline is now making the difficult decision to cut service to Nigeria altogether. According to an Emirates spokesperson:

“Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria, and have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution.”

“Regrettably there has been no progress. Therefore, Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective 01 September 2022, to limit further losses and impact on our operational costs that continue to accumulate in the market.”

“Should there be any positive developments in the coming days regarding Emirates’ blocked finds in Nigeria, we will of course, re‑evaluate our decision.”

Emirates has at times had a rocky relationship with the Nigerian government. In 2019, a Nigerian court seized an Emirates 777 over a passenger’s 2007 denied boarding dispute. Meanwhile in 2021, the Nigerian government banned Emirates over a reciprocal slot dispute, involving Air Peace’s ability to fly to Dubai.

Emirates is discontinuing flights to Nigeria

Will other airlines follow Emirates’ lead?

According to the International Air Transport Association (IATA), as of June 2022 foreign airlines had $450 million in revenue withheld in Nigeria. All kinds of major international airlines fly to Nigeria, ranging from British Airways, to Delta, to KLM, to Lufthansa, to Qatar Airways, to Turkish Airlines, to United Airlines.

I’m a bit surprised that Emirates is one of the only airlines to cut service to Nigeria so far. Are other airlines just happy accruing their revenue in Nigeria in hopes of eventually being able to transfer it internationally, do they think pulling out of Nigeria is too drastic, or what?

Will other airlines pull out of Nigeria as well?

Bottom line

Emirates is pulling out of Nigeria as of September 2022, due to no longer being able to get money out of the country. Emirates apparently has $85 million stuck in Nigeria, with that total growing by $10 million per month. The airline is cutting its losses and exiting the market, unless the Nigerian government changes its stance.

I’m curious to see if other airlines follow Emirates’ lead, or if Nigeria’s government tries to find a solution.

What do you make of Emirates pulling out of Nigeria?

Conversations (28)
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    1. Fed UP Guest

      PS - All IATA airlines should pull out servicing Nigeria until they wise up.

  1. Steve M Guest

    Can't wait to go there.
    OMFG.
    Sounds lovely.

  2. Boston Elite New Member

    I read this article, as I always do when it is an Africa-centric aviation story, more because I was interested in Sean M.'s comments. Always interesting. Thank you!

  3. loungeabuser Guest

    Dear Sir:
    I have $10 million USD per month I am unable to repatriate from the ministry in Lagos and need your assistance . If I may please have your banking information I will reward you with 10% of the repatriated funds.
    --Sheikh Ahmed Bin Saeed Al Maktoum, HRH
    and CEO of Emirates

  4. Sagaran Reddy Guest

    Business is Business. Waiting another 6months is not an option it will be another 6o million usd +the current 85 million dollars +the int
    rest rates and escalation fuel costs and maintaining the air line and operations. NOW WAY .
    It is a well calculated taught and decision Emirates has made
    All air lines must follow suit.
    Next election could be unrest and further unstability like the rest off Africa ,riddled...

    Business is Business. Waiting another 6months is not an option it will be another 6o million usd +the current 85 million dollars +the int
    rest rates and escalation fuel costs and maintaining the air line and operations. NOW WAY .
    It is a well calculated taught and decision Emirates has made
    All air lines must follow suit.
    Next election could be unrest and further unstability like the rest off Africa ,riddled with crime and corruption.
    Our African governments should sit back and ask themselves, why is it the rest off the so progressive while wr are regressing.

  5. Hamood Guest

    Even under a machine gun on my head, dealing with anything connected to a Nigerian as a person or Governmeny, never ever under any circumstances.

    I hope that all foreign airlines and other big companies follow what Emiarates have done
    .bravo Emirates

  6. Jon Guest

    Why don't they get their money out of Nigeria the normal way, by sending out emails to random people asking to use their bank account?

    1. Never In Doubt Guest

      Best OMAAT comment in recent memory.

      Bravo, sir.

    2. Sean M. Diamond

      While I know your comment is intended as a joke, that basically has been one way many airlines have moved cash out of Nigeria through the years - ie. Secondary market purchases in small quantities that then get consolidated. The problem today is that the spread between the official rates and the secondary market rates is nearly 100% which no longer makes it feasible to earn in official naira and then purchase the dollars back at market rates.

  7. Ray Guest

    This will surely impact the following demographics:

    1. Nigerian influencers who frequent/live in Dubai:
    2. Nigerian politicians and/or businesspersons who rely on the airline for Dubai & beyond flights

    In the meantime, how will they get their fix? Doha?

    1. Luke Guest

      I'd be surprised that Al Baker would put up with similar nonsense of having money stuck/not getting paid. Not sure how they are handling this

  8. Tim Dunn Diamond

    Restrictions on expatriating currency was common in many developing world countries including S. America. Braniff reportedly had leather seats on its planes because it couldn't get its money out of Brazil and bought leather to get its revenue out.
    Unfortunately, countries will target international travel which represent the ability of wealthy people to get out of a country and take their money.
    TO the extent that other airlines get more of their revenue...

    Restrictions on expatriating currency was common in many developing world countries including S. America. Braniff reportedly had leather seats on its planes because it couldn't get its money out of Brazil and bought leather to get its revenue out.
    Unfortunately, countries will target international travel which represent the ability of wealthy people to get out of a country and take their money.
    TO the extent that other airlines get more of their revenue from travel that originates outside of Nigeria than inside Nigeria, they might be better off.

  9. Mark Guest

    Most airlines sell very few tickets in local currency in Nigeria. Delta and United probably have 90% of their tickets sold in USD while the European airlines might have a little different mix, but they’ve all been burned before so are learning from past mistakes.

    1. Sean M. Diamond

      It is illegal to sell tickets within Nigeria in anything other than Naira - you can only accept foreign currency under specific circumstances. As a result, most airlines will restrict sales in lower RBDs for local sale and also restrict ticketing of all but SITI itineraries.

  10. Sean M. Diamond

    This is a more complicated situation than usual in Nigeria. You could previously mitigate forex crunches there (which are extremely regular occurrances) by spending in Naira -- you could pay your airport taxes, government taxes, fuel bill, ground handling, catering, etc.. in Naira so you would at least spend a chunk of your local earnings that way.

    However today the requirement is that foreign airlines have to pay EVERYTHING in hard currency - so you...

    This is a more complicated situation than usual in Nigeria. You could previously mitigate forex crunches there (which are extremely regular occurrances) by spending in Naira -- you could pay your airport taxes, government taxes, fuel bill, ground handling, catering, etc.. in Naira so you would at least spend a chunk of your local earnings that way.

    However today the requirement is that foreign airlines have to pay EVERYTHING in hard currency - so you have to collect fares and taxes from passengers in Naira at an unrealistic "official" rate, but then you have to pay bills and remit those taxes to the government in USD at much higher market rates. This is simply unsustainable.

    Basically its not even that you cant get your money out, but you also have to keep pouring in new good money after bad just to keep operating.

    Add to this the fact that the current aviation minister seems to have a longstanding grudge against Emirates (no idea why), and I can understand why they have decided to temporarily pull the plug on Nigeria until after the presidential elections scheduled for next February. Depending who comes to power (they almost certainly will not retain Hadi Sirika in the Aviation Ministry regardless), there will be a clean slate to at least resume discussions in good faith again - something that is simply impossible in the silly season just 6 months out from the polls.

    1. dfw88 Guest

      Thanks so much for your comments on aviation blogs. They're some of the best and most informative out there.

    2. Brandon Guest

      Very informative article, knowing how hard currency works in 3rd world environments,,,the commentors are excellent.

      I read a lot about Nigeria, explosions by gas theft, graft, corruption, home brewed alcohol poisoning deaths, internet scam schools.
      Never going there, just too much chaos, dysfunction there for my taste.

    3. Sean M. Diamond

      Out of chaos rises opportunity.

      Nigeria has so much potential, not just in aviation but in every sector, that whoever can crack the code and successfully deliver a product is guaranteed success.

      The former airline I founded went from zero operations in Nigeria to being the largest international operator in Nigeria in less than 5 years. We snuck in under the radar and delivered a product that was the antithesis of the flashiness that most...

      Out of chaos rises opportunity.

      Nigeria has so much potential, not just in aviation but in every sector, that whoever can crack the code and successfully deliver a product is guaranteed success.

      The former airline I founded went from zero operations in Nigeria to being the largest international operator in Nigeria in less than 5 years. We snuck in under the radar and delivered a product that was the antithesis of the flashiness that most people think Nigerian consumers want - it focused on safety, reliability and affordability in that order. When the competition is unable to even deliver the basics, you don't need to reinvent the wheel to be successful.

    4. Stuart Guest

      @Sean. Your comments and analysis on the region is always amazing. Thank you.

    5. Ehch Guest

      Skipped right to the comments looking for your response Sean. Learn a lot from you and appreciate your commentary!

  11. Thom Casa Guest

    The withholding of airline earnings used to
    be the norm in Sudan which led to many airlines suspending service to Khartoum.

    1. Sean M. Diamond

      Not just Sudan or Nigeria, but also Angola, Zimbabwe, Malawi, Burundi and Equatorial Guinea as per most recent conditions.

    2. Hiro Gold

      Equatorial Guinea? That's quite a surprise for a country that once had the highest per capita GDP in Africa just a decade ago.

    3. Sean M. Diamond

      EQG is presently in the middle of an IMF consultation after the economy was ravaged when oil demand/prices dropped in 2020. The per capita GDP may still be the highest on paper, but there are structural issues that urgently need to be addressed (and to their credit they are trying to do so).

    4. Fed UP Guest

      all of the fun spots !

  12. Ivan Guest

    Top of post says they are pulling out in November but in the statement it says September. Typo?

    1. Ben Schlappig OMAAT

      @ Ivan -- Typo indeed. Fixed, thanks for the heads up.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

Sean M. Diamond

This is a more complicated situation than usual in Nigeria. You could previously mitigate forex crunches there (which are extremely regular occurrances) by spending in Naira -- you could pay your airport taxes, government taxes, fuel bill, ground handling, catering, etc.. in Naira so you would at least spend a chunk of your local earnings that way. However today the requirement is that foreign airlines have to pay EVERYTHING in hard currency - so you have to collect fares and taxes from passengers in Naira at an unrealistic "official" rate, but then you have to pay bills and remit those taxes to the government in USD at much higher market rates. This is simply unsustainable. Basically its not even that you cant get your money out, but you also have to keep pouring in new good money after bad just to keep operating. Add to this the fact that the current aviation minister seems to have a longstanding grudge against Emirates (no idea why), and I can understand why they have decided to temporarily pull the plug on Nigeria until after the presidential elections scheduled for next February. Depending who comes to power (they almost certainly will not retain Hadi Sirika in the Aviation Ministry regardless), there will be a clean slate to at least resume discussions in good faith again - something that is simply impossible in the silly season just 6 months out from the polls.

15
Jon Guest

Why don't they get their money out of Nigeria the normal way, by sending out emails to random people asking to use their bank account?

7
Sean M. Diamond

Out of chaos rises opportunity. Nigeria has so much potential, not just in aviation but in every sector, that whoever can crack the code and successfully deliver a product is guaranteed success. The former airline I founded went from zero operations in Nigeria to being the largest international operator in Nigeria in less than 5 years. We snuck in under the radar and delivered a product that was the antithesis of the flashiness that most people think Nigerian consumers want - it focused on safety, reliability and affordability in that order. When the competition is unable to even deliver the basics, you don't need to reinvent the wheel to be successful.

6
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