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United Airlines stops flights to Nigeria over lingering forex illiquidity

27 May 2016, 01:30 pm
Financial Nigeria
United Airlines stops flights to Nigeria over lingering forex illiquidity

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- United Airlines operates a daily route from Houston, Texas, to Lagos, the carrier’s only route to Africa.

A United Airlines

United Airlines has announced it will stop flying to Nigeria next month citing difficulties in repatriating its ticket sales revenues from the country as well as weakness in the oil and gas sector.

The American airline operates a daily route from Houston, Texas, to Lagos. It is also the carrier’s only route to Africa. In a note to employees on Wednesday, United Airlines said the Houston to Lagos route had underperformed for years although it was kept active because of its importance to Texas-based customers. However, the last flight to Lagos will now be on June 30th.

“Repatriation has been a significant issue, as has been the downturn in the energy sector,” Jonathan Guerin, United Airlines’ spokesman, told Bloomberg on Thursday.

The Central Bank of Nigeria has imposed strict foreign exchange controls because of the slump in global oil prices, which has depleted Nigeria’s forex reserves.

This move has impacted the operations of major international carriers in Nigeria as they face difficulties repatriating their revenues from ticket sales. The International Air Transport Association (IATA) estimated that foreign airlines’ funds that are trapped in Nigeria as of March 31, 2016 stood at $575 million.

United Airlines joins other major carriers, which have either stopped or are reconsidering their operations in Nigeria because of the country’s current economic challenges. In April, Iberia, Spain’s leading airline, said it would stop its Nigeria route from May 12th due to dwindling passenger traffic to its Madrid hub.

Following United Airlines impending exit from Nigeria, Delta Airlines will be the only major U.S. airline flying to Africa. International passengers can, however, fly to Nigeria with United Airlines through its trans-Atlantic business partner, Deutsche Lufthansa AG, which makes a stop at Frankfurt, Germany.


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