The last flight will be June 30, after which Delta Air Lines will be the only major US carrier flying to Africa. It was coming, and more could follow.
United Airlines will stop flying to Nigeria next month, ending the carrier’s only route to Africa because of weakness in the energy sector and difficulties in collecting money from tickets sold in that country.
The daily route from Houston to Lagos had underachieved for years but was kept alive because of its importance to Texas-based customers, United Continental Holdings Inc. said in a note to employees on Wednesday.
The last flight will be June 30, after which Delta Air Lines Inc. will be the only major US carrier flying to Africa.
Nigeria has restricted the amount of money that can be moved abroad after the global slump in oil prices depleted the government’s US currency reserves. The country owed airlines about $575 million in air fares as of March 31, according to the International Air Transport Association, even after the Central Bank of Nigeria released funds to pay off part of the backlog.
“Repatriation has been a significant issue, as has been the downturn in the energy sector,” said United spokesman Jonathan Guerin, who confirmed the note’s authenticity.
The Nigerian economy contracted for the first time since 2004 in the first quarter as the drop in crude prices eroded the value of oil exports. Foreign-currency reserves have slipped to $26.5 billion, the lowest in more a decade, prompting the limits on dollar repatriation.
More could cancel
Passengers can still fly to Nigeria on United’s trans-Atlantic business partner, Deutsche Lufthansa AG, through a connection in Frankfurt. The Boeing Co. 787 serving Lagos will be used on the San Francisco-to-Tel Aviv route, which will expand to daily in October from three times weekly, according to the airline note.
Nigerian Vice President Yemi Osinbajo told IATA Chief Executive Officer Tony Tyler this week that airlines must agree “a realistic and achievable payment schedule,” the trade body said.
More carriers could begin severing links if the issue isn’t resolved, damaging Lagos’s standing as an aviation hub, IATA said.
Carriers including United Airlines, Delta Air Lines Inc. and American Airlines Group Inc. pulled capacity from Venezuela during a similar dispute in 2014 as a 61% inflation rate limited the state’s access to dollars. Airlines had the equivalent of $3.9 billion trapped in Venezuelan bolivars, IATA estimated.
British Airways parent IAG SA and Air France-KLM Group said in March they were unable to access ticket proceeds in Egypt as political instability there eroded foreign exchange reserves, and demand for the Egyptian pound faded.
FOLLOW NEW AFRICA BUSINESS NEWS ON FACEBOOK @ New Africa Business News.com