The Federal Government of Nigeria and the United Arab Emirates have reached a new understanding that allows the use of the United States dollar and other freely convertible currencies as legal tender for airfares between both countries.
This development was detailed in the revised Bilateral Air Services Agreement between the two nations.
The agreement facilitates the official return of Emirates Airlines to Nigerian airspace, bringing an end to the diplomatic and commercial deadlock that began in 2022, when the airline suspended its operations in Nigeria.
As outlined in the agreement, designated airlines from both countries are now permitted to issue tickets and provide ancillary services using local currencies or any other internationally accepted currency.
Designated carriers from the UAE include Emirates, Etihad Airways, Air Arabia, flydubai, Air Arabia Abu Dhabi, and Wizz Air Abu Dhabi. Nigeria’s designated airlines are Air Peace and United Nigeria Airlines.
According to the document, “The designated airlines of each contracting party shall have the right to sell, and any person shall be free to purchase, such transportation and its ancillary products and facilities in local currency or in any other freely convertible currency.”
The agreement further grants carriers the liberty to use their own transportation documents and to conduct commercial operations either independently or through appointed agents.
While the new terms align partially with existing practices for some foreign airlines operating in Nigeria, they now carry bilateral endorsement.
Investigations indicate that both Delta Airlines and United Airlines have long operated under similar terms, transacting with Nigerian passengers in dollars under bilateral agreements already in place a policy also backed by the Nigerian government.
Despite expectations that the agreement would enhance international air connectivity, Nigerian travel agencies have pushed back against the dollarisation of air ticket sales.
With Emirates, Delta, and United Airlines now operating in foreign currencies, travel agents are reportedly struggling with large sums of foreign exchange, which must be remitted to the International Air Transport Association (IATA).
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Additionally, the Central Bank’s $10,000 withdrawal and transfer limit has created further challenges for local agents in managing operations.
The agreement also stipulates that foreign carriers must settle all operational costs incurred within Nigeria using the local currency, unless exempted under domestic financial regulations.
“The designated airlines of one contracting party shall have the right to pay for local expenses in local currency or, provided that this is in accordance with local currency regulations, in any freely convertible currencies,” the agreement states.
While UAE-designated airlines have resumed flights to Nigeria under the new terms, Air Peace and United Nigeria Airlines have yet to begin operations to the UAE, for reasons that remain undisclosed.
The bilateral agreement also leaves the door open for additional UAE carriers to be designated in the future, with Nigeria reaffirming its cooperation and recognition of its two chosen airlines.
“Additional UAE airline(s) may be designated in due course by the aeronautical authority of the UAE. The delegation of Nigeria re-confirmed their designation of United Nigeria Airlines and Air Peace as the designated airlines of the Federal Republic of Nigeria.”