IATA Announces Significant Reduction In Blocked Airline Funds To $1.8 Billion
The International Air Transport Association (IATA) has recently shared encouraging news about a notable decline in the amount of airline funds that are being withheld from repatriation by governments worldwide. As of April’s end, the total blocked funds have been reduced to approximately $1.8 billion, marking a significant 28% decrease. This reduction, amounting to $708 million less since December 2023, represents a considerable improvement in the situation for airlines.
IATA has consistently urged governments to remove barriers that prevent the repatriation of airline revenues obtained from ticket sales and various operations, in line with international agreements and treaty obligations. “The reduction in blocked funds is a positive development. The remaining $1.8 billion, however, is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements. Even more importantly, it is a pre-requisite for airlines — who operate on thin margins — to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues,” expressed Willie Walsh, IATA’s Director General.
The notable progress made has been largely attributed to the significant steps taken by countries like Nigeria and Egypt. Both countries made substantial moves to release blocked airline funds, although the devaluation of the Egyptian Pound and the Nigerian Naira posed additional challenges for the involved airlines.
Progress in Nigeria
In Nigeria, the situation peaked in June 2023 when blocked funds hit $850 million, causing severe disruptions and straining the financial stability of airlines operating in the region. This led to reduced operation scales by some carriers, and one even temporarily suspended its service to Nigeria, showcasing the profound impact on the country’s aviation sector. By April, 98% of these funds had been successfully released, leaving only $19 million pending due to ongoing verifications by the Central Bank of Nigeria (CBN) regarding outstanding forward claims by commercial banks.
“We commend the new Nigerian government and the Central Bank of Nigeria for their efforts to resolve this issue. Individual Nigerians and the economy will all benefit from reliable air connectivity for which access to revenues is critical. We are on the right path and urge the government to clear the residual $19 million and continue prioritizing aviation,” Walsh added.
Remarkably, eight countries now account for 87% of the total remaining blocked funds, which equates to $1.6 billion.
Bottlenecks in Pakistan and Bangladesh
A significant portion of the challenge now lies in Pakistan and Bangladesh, where $731 million of airline revenues remain untransferable. Airlines in Pakistan are currently unable to repatriate $411 million, while those in Bangladesh cannot access $320 million of their earnings.
“Pakistan and Bangladesh must release the $731 million in blocked funds immediately to ensure airlines can continue providing essential air connectivity. In Bangladesh, the solution is in the hands of the Central Bank, which must prioritize aviation’s access to foreign exchange in line with international treaty obligations. The solution in Pakistan is finding efficient alternatives to the system of audit and tax exemption certificates, which cause long processing delays,” said Walsh, emphasizing the critical nature of resolving these impediments for the continuation of essential air services.
The reduction in blocked funds is undoubtedly a positive stride towards ensuring the viability and financial health of the aviation industry. It underscores the importance of collaboration between governments and the global aviation community to uphold the vital connectivity provided by airlines, facilitating economic growth and global integration.
