Airlines face backlash for rejecting naira payments

Airlines operating in Nigeria are facing backlash for a continued practice of rejecting the Naira for ticket payments, a move that is described as a “punishment” on the local currency and an affront to Nigeria’s sovereignty.¹

Here is a summary of the situation:

The Core Issue:

• Rejection of Naira: A number of international airlines have been accused of insisting on ticket payments exclusively in U.S. dollars or through credit card transactions that are processed in foreign currency.²
• Violation of Regulations: This practice directly contradicts Nigerian regulations, specifically the Central Bank of Nigeria’s directive that prices for goods and services in Nigeria must be in Naira.³ It also goes against the provisions of Bilateral Air Services Agreements (BASA).⁴
• Backlash from Stakeholders: The National Association of Nigerian Travel Agencies (NANTA) has been particularly vocal in its criticism, with its president, Yinka Folarin, describing the actions of a few airlines as “arrogant.”⁵

Reasons for the Airlines’ Actions (and the Counter-Arguments):

• Trapped Funds: The primary reason cited by foreign airlines for not accepting Naira has historically been the issue of “trapped funds.”⁶ This refers to their inability to repatriate millions of dollars in ticket sales from Nigeria due to the country’s foreign exchange challenges.⁷
• Improved Forex Market: However, NANTA and other stakeholders argue that this justification is no longer valid.⁸ They point out that over 30 airlines are now able to repatriate their funds without issue due to recent improvements in the foreign exchange market, making the actions of the remaining few airlines unjustifiable.⁹
• “Arrogance” and Unjustified Pricing: Critics suggest that the airlines’ refusal to accept Naira is now an act of “arrogance” and a way to exploit the Nigerian market by forcing travelers to pay inflated prices.¹⁰

Impact on Passengers and the Economy:

• Exorbitant Fares: The practice has led to a significant increase in ticket prices for Nigerian travelers, as they are forced to use alternative and often more expensive payment channels, such as local agents or opaque booking platforms.¹¹
• Economic Undermining: Stakeholders argue that this “dollarization” of services within Nigeria undermines the government’s efforts to stabilize the Naira and rebuild confidence in the economy.¹²

Regulatory Response:

• NCAA’s Position: The Nigerian Civil Aviation Authority (NCAA) has acknowledged the complaints and has previously warned airlines to desist from the practice. It has also imposed sanctions and fines on foreign carriers for consumer protection-related violations, signaling its resolve to protect the rights of Nigerian passengers.¹³
• Need for Action: There is a growing call from industry experts and bodies like NANTA for the government to take more decisive action and stop airlines that continue to defy local regulations.¹⁴