An aviation crisis is imminent in Pakistan where airlines are having trouble recovering $290 million due to a severe financial crisis, Financial Times reported on Thursday.
The report cited the International Air Transport Association (IATA) which understands that it has become very difficult for carriers to serve Pakistan because they are unable to repatriate their dues, which are paid in dollars.
Philip Goh, the IATA’s Asia-Pacific head, was quoted as saying, “Airlines are facing long delays before they are able to repatriate their funds. Some airlines still have funds stuck in Pakistan from sales in 2022″.
According to the IATA, which represents 300 airlines and 83 percent of global air traffic, $290 million was stuck in Pakistan as of January, an increase of nearly a third since December. “If conditions persist that make the economics of operation to a country unsustainable, one would expect airlines to put their valued aircraft assets to better use elsewhere,” Goh added.
As per Cirium data, foreign airlines have been hesitant to return to Pakistan, with fewer total flights scheduled for March 2023 than for the same month in 2019. The chief executive officer of aviation consultancy Martin Consulting, Mark Martin, cautioned, “If you can’t take money out of a country, then there’s no point in you even going there”.
It bears mentioning that Virgin Atlantic announced the suspension of its operations in Pakistan in February. It said at the time that the decision was part of its plan to restructure operations, but the Financial Times report asserts that the decision was based on the economics of the route, citing a source well-informed on the matter.
The Pakistan Civil Aviation Authority has stated that it is attempting to pay the airlines on time and has been in contact with relevant authorities to get the issue resolved on priority. A few weeks ago, a senate panel directed the aviation ministry to meet with airline executives and dispel the negative opinion about Pakistan by helping them resume normal operations.