INDEPENDENT NG
Mr. Bankole Bernard, Group Managing Director, Finchglow Travels, in this interview with OLUSEGUN KOIKI, speaks on the trapped funds of foreign airlines in Nigeria, the rush for construction of agro-cargo airports by State governments and assessed the government’s eight years in the country’s aviation sector. Excerpts:
What is your say about the trapped funds of foreign airlines, which IATA said last week has climbed to $743m?
This is an unfortunate situation where I will consider certain things are a misplacement of priority.
We have a choice in business; if the Bilateral Air Service Agreement (BASA) says their funds as it were, once they make sales in local currency, change it to foreign currency, we should be able to fulfill that obligations because reputational damage causes a lot and it is one of the things that made an airline like Emirates and Etihad Airways to leave when we could have had more airlines coming into the market, but they don’t want their funds to be trapped.
So, they will go to other market that is lucrative and this would not have been possible if we were doing proper dialogue.
If you say that you do not have funds for them at official rate as it were, if you are going to make them pay for a premium, they will sell the ticket at a premium and they will be able to repatriate their funds, but you don’t give them at the official rate and they are unable to repatriate their money. That is wrong and that is being fraudulent as a nation and it is not good for our image.
Today, the rate at which we are issuing ticket is N551 to a dollar. Is that the official rate? No, but that is the rate we are issuing tickets, which is moving closer to the black market.
This means the issue of trapped funds would not have been if it had been properly managed.
The funds became trapped because we were not ready to give them at the official rate.
Why didn’t you come out all these while and tell them the rate you would give the airlines so that they can sell their tickets at particular rates as long as it is official.
After all, we have multiple exchange rates. So, what will make this one different? Then, there will not be issue of trapped funds and people will be able to do their business and the agony that you are putting a lot of travellers to will not be there.
So, this thing is all about applying your sense, but we have a lot of people that are not willing to think.
Now that we have started to sell tickets at N551 to a dollar, I can tell you that the issue of trapped funds would move as fast as possible and it will come to zero. To fly to London now, it’s about a million naira and that is the cheapest.
The law of demand and supply is what is applicable in every business. If the supply outweighs the demand, the price would crash, but when people are threatened by the fact that their funds cannot be repatriated, the next thing they start to do is to reduce inventories so that they could make money. In the airline business, we have two ways of selling; you either sell volume or you make yield. Volume is when you have a lot of people while yield is when you sell a few, but you still make your money.
