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FG-Forex Scarcity,Foreign Airlines Accused of Ripping off Nigerians.

Foreign airlines operating in Nigeria
have been accused of devising a means of ripping off Nigerians and the
federal government by taking advantage of the shortage of dollars in the
foreign exchange market, and the gap between the official exchange rate
and the parallel market rate, investigations have revealed.
According to sources in the industry and
the Nigerian Civil Aviation Authority (NCAA), the airlines procure their
foreign exchange from ticket sales at the official rate of 199/$1 from
the Central Bank of Nigeria (CBN) for onward repatriation to their home
countries, but allegedly use the parallel market rate of over N300 to
the dollar when Nigerians and other passengers opt to pay for their
dollar-priced tickets in naira instead of using the official exchange
rate.
In the process, the foreign airlines are
making a kill from the 40 per cent spread between the official and
parallel forex markets, and repatriating the cream off the top of ticket
sales to their countries.
In particular, British Airways (BA) and Virgin Atlantic Airways, two
major carriers patronised by Nigerians on the Lagos-London route, have
been accused of engaging in the sharp practice, which industry sources
say accounts for the astronomical and inexplicable hike in their
airfares in recent months.
The rise in airfares, sources added, has
happened despite falling oil prices and the attendant lower cost of
aviation fuel, a major component in the operating costs of all airlines
worldwide, which should have been reflected in the airfares charged by
the airlines.

But the allegation has been denied by BA and Virgin Atlantic which
described the act as illegal and insisted that the payment platform
cannot be manipulated.
However, an informed source told thisday:
“We (foreign and domestic airlines) buy dollars at the CBN rate, and
all our airfares are priced in dollars for the purpose of comparison.

“But the problem is that foreign airlines use the parallel market rate
to determine the naira airfare for passengers who opt to pay for the
tickets in naira.
“By doing this, they are cheating
Nigerians and the federal government because by collecting the money
from passengers at the parallel market rate, why do they want CBN to
give them dollars at the official rate when they need to repatriate to
their countries? They might as well source their dollars from the
parallel market.”
Passengers use four options to pay for
their international airfares in the country: one, they could book online
and pay for their tickets using their dollar denominated credit or
debit cards; two, they could make a booking online, get a reference
number and take it to a designated Nigerian commercial bank used by the
airline to pay for the ticket in dollars; three, they could do the
booking online, get the reference number and opt to pay at the bank in
naira; and four, they could use a travel agent and pay in naira or
dollars.

It is passengers who opt to pay in naira at the bank that are allegedly being ripped off by the airlines.
A case in point,was that
of a senator (name withheld) who wrote a letter of complaint to the
Consumer Protection Directorate of the NCAA against BA recently,
alleging that he had booked a ticket online, but was made to pay for the
ticket at the bank at the parallel market rate.

The Director of Consumer Protection Directorate, Mr. Adamu Abdullahi,
informed thisday that when NCAA got the letter from the senator, he
wrote to BA to respond to the allegation.
He said BA’s Regional Manager, West Africa, Mr. Kola Olayinka, wrote back denying the charge made by the senator.
Excerpts of the BA’s letter to NCAA
stated: “I can assure the distinguished senator through you sir, that
our selling rate in Nigeria is regulated by the Central Bank of Nigeria,
and have (sic) been moving between 197-200 in recent months, there is
no opportunity to manipulate this as it’s a system generated rate, even
if there is, I assure the senator, British Airways will be the last
organisation to be involved in such pettiness!
“I hope the senator will be satisfied by
these explanations and be reassured that in no way will British Airways
as a company, be involved in any act that may even look like ‘fleecing
our customers’ nor will we condone any such behaviour by any of our
employees.”

Nigerian airlines that fly international
routes have so far adhered to the CBN rates in ticket sales to
passengers.
To ensure that Nigerian operators abide
by the rules, a source disclosed that CBN encourages its officials to
patronise Nigerian airlines and has ensured that Nigerian carriers sell
their tickets in naira at the official exchange rate.
A source with Arik Air says  “If you look at our premium class ticket fare, we are just about 16 per
cent cheaper than the two other airlines that fly on the Lagos-London
route.
“But when you multiply our own dollar fare by CBN rate, it comes to
about N650,000 but their own is N1.8 million so they are using the
parallel market rate to charge passengers.”
When contacted by thisday on the issue,
Mr. Olayinka denied the allegation that BA sold its tickets using the
parallel market rate, stating that the payment system could not be
manipulated.

“It is not possible because we sell through Global Distribution System
(GDS) and we all go through the International Air Transport Association
(IATA) and in Nigeria all the airlines go through Billings Settlement
Plan (BSP), which in turn goes through IATA.
 “It is illegal and impossible for us to
do that. We all know the situation we are going through trying to remit
our money. In Nigeria, we give discounts to those who wish to pay in
dollars and the discount can be as high as 20 per cent.
“Because we all go through the same
platform with other airlines, our selling rate must be the same. It is
not possible for us to sell at a different rate. If you go to a BA desk,
we sell at the rate that is applicable, which at the moment is N197.50,
but this could change so we add N1 or N2.” Olayinka said.
Denying the allegation also, the
spokesperson of Virgin Atlantic Airways, Kudirat Scott-Igbene, said the
airline uses the system rate, which is automatically generated and
therefore could not be manipulated.

An IATA source also said : “There is no way this can happen. It
is absolutely not possible. The GDS is attached to the CBN rate. There
have been allegations but they have not been substantiated. The system
is electronically operated, so it cannot be manually manipulated.”
Reacting to the allegation, a source with
the CBN said the central bank has allowed foreign airlines to access
forex from the interbank market since 2012, however, “if they have
decided to sell at the parallel market rate, it is the responsibility of
the NCAA which has the consumer protection directorate to ensure they
do the right thing.”
Meanwhile, Spanish national airline,
Iberia, announced yesterday that it was pulling out of Nigeria following
protracted passenger drought since late last year.

The airline, which was taken over by BA in 2010 and is part of the One
World Alliance with the British airline, said it would wind down
operations by May 12, 2016.
In a statement by Olayinka, the airline
said: “This is to notify you that our Spanish Airline, Iberia PLC will
be suspending services into and out of Nigeria effective 12 May 2016.”
The airline said this was in response to
the difficult times and the inability of the airline to record high load
factor as it used to as the economic crunch bedevilling the nation has
depleted the finances of those who otherwise travel out of the country
on business, tourism and for training.
“This is a very tough decision that has
been taken by our head office in view of the wide acceptance we have
received from our passengers, especially those heading towards Spain and
Latin America over the years.
“Iberia’s commitment to Nigeria since we
started operations in 2014 has never been in doubt, but over the last
few months, we have witnessed dwindling passenger figures to Madrid our
main hub and our business has faced very difficult and exceptional
circumstances, which has brought about this very difficult decision,”
the statement added.
While thanking Nigerians for their
steadfastness and support, the airline said to its customers: “You have
truly been a partner and I hope you will understand the decision taken
by Iberia in these very difficult times.”
There are rising fears that other
international carriers similarly affected by the economic contraction in
the country might stop their operations or cut their services to
Nigeria.
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