Blocked funds rise sharply, threatening airline connectivity- IATA

AMMAN- The International Air Transport Association (IATA) has issued a warning regarding the surging amounts of blocked funds, which it sees as endangering airline connectivity in implicated markets.

As of April 2023, blocked funds in the industry have risen by 47% to $2.27 billion, a stark increase from $1.55 billion the previous year.

"Airlines are in a tough spot; they can't keep servicing markets where they can't repatriate revenues from their commercial activities. We urge governments to collaborate with the industry and find a solution, as airlines play a crucial role in stimulating economic activity and job generation," stated Willie Walsh, Director General of IATA.

A significant chunk of blocked funds - 68.0% - comes from five countries: Nigeria ($812.2 million), Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million), and Lebanon ($141.2 million).

IATA called on governments to respect international treaties and allow airlines to repatriate funds generated from ticket sales, cargo space, and other activities.

Speaking at IATA's annual general meeting, Kamil Alawadhi, IATA’s Vice President for Africa and the Middle East, voiced concern over the growing trend of African countries withholding funds from airlines.

About 80% of the withheld funds - the repayments for tickets purchased in local currencies but held back due to foreign currency unavailability - originate from the Middle East and Africa.

"Every cent matters in the airline industry. By not meeting their financial obligations, these governments are squeezing the industry even further," noted Alawadhi.

The consequences of this action are severe for the governments as well, leading to reduced connectivity, inflated ticket prices, wavering confidence from foreign investors, and the potential collapse of domestic travel agencies, Alawadhi explained.

He emphasised the necessity of swift repatriation of funds to maintain airline operations and encourage investment.