The International Air Transport Association (IATA) warned that rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets.
The industry’s blocked funds have increased by 47 percent to $2.27 billion in April 2023 from $1.55 billion in April 2022, while $188.2 million remain blocked in Pakistan.
“Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation,” said Willie Walsh, IATA’s Director General.
The top five countries account for 68.0 percent of blocked funds. These comprise:
- Nigeria ($812.2 million)
- Bangladesh ($214.1 million)
- Algeria ($196.3 million)
- Pakistan ($188.2 million)
- Lebanon ($141.2 million)
IATA has urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate these funds arising from the sale of tickets, cargo space, and other activities.
The Association’s remarks follow last year’s payment backlog prevalent in Pakistan which has kept the country in the top five markets where airline funds are being blocked from repatriation.
In March 2023, the IATA warned that it has become very difficult for carriers to serve Pakistan because they are unable to repatriate their dues, which are paid in dollars. “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,” Philip Goh, the IATA’s Asia-Pacific head said at the time.
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 2022. While the outstanding dues have dropped in volume since then, they remain at $188.2 million as of April 2023, posing a threat to airline connectivity in the country.