Airlines' Blocked Funds Soar To $2 Billion| MENAFN.COM

Friday, 03 February 2023 05:33 GMT

Airlines' Blocked Funds Soar To $2 Billion


(MENAFN- Jordan Times)

GENEVA - The International Air Transport Association (IATA) warned on Wednesday that the amount of airline funds for repatriation being blocked by governments has risen by more than 25 per cent in the last six months, urging governments to remove all barriers to airlines repatriating their revenues.

IATA indicated that the amount reached $394 million in the last six months, increasing the overall volume of total funds blocked to around$2.0 billion.

Willie Walsh,
IATA's Director General, called on governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities, in line with international agreements and treaty obligations.
IATA
also renewed its calls on Venezuela to settle the $3.8 billion of airline funds that have been blocked from repatriation since 2016 when the last authorization for limited repatriation of funds was allowed by the Venezuelan government.
“Preventing airlines from repatriating funds may appear to be an easy way to shore up depleted treasuries, but ultimately the local economy will pay a high price. No business can sustain providing service if they cannot get paid and this is no different for airlines,” he said.

“Air links are a vital economic catalyst. Enabling the efficient repatriation of revenues is critical for any economy to remain globally connected to markets and supply chains,” he added.

He added:“The situation has been improving, but has started to deteriorate again.”

By the end of 2022, net losses of airlines are expected to reach $6.9 billion, which is lower than a previous forecast of $9.7 billion losses for this year, according to IATA.

According to IATA, Airline funds are being blocked from repatriation in more than 27 countries and territories and the top five markets with blocked funds (excluding Venezuela) are Nigeria with $551 million, Pakistan with $225 million, Bangladesh with $208 million, Lebanon with $144 million and Algeria with $140 million.

In Nigeria, repatriation issues arose in March 2020 when demand for foreign currency in the country outpaced supply and the country's banks were not able to service currency repatriations.
Despite these challenges, Nigerian authorities have been engaged with the airlines and are, together with the industry, working to find measures to release the funds available.
“Nigeria is an example of how government-industry engagement can resolve blocked funds issues. Working with the Nigerian House of Representatives, Central Bank and the Minister of Aviation resulted in the release of $120 million for repatriation with the promise of a further release at the end of 2022. This encouraging progress demonstrates that, even in difficult circumstances, solutions can be found to clear blocked funds and ensure vital connectivity,” said Kamil Al-Awadhi as Regional Vice President for Africa and the Middle East.
In Venezuela, airlines have also restarted efforts to recover the $3.8 billion of unrepatriated airline revenues.

There have been no approvals of repatriation of these airline funds since early 2016 and connectivity to Venezuela has dwindled to a handful of airlines selling tickets primarily outside the country.

Venezuela is currently looking to bolster tourism as part of its COVID-19 economic recovery plan and is seeking airlines to restart or expand air services to/from Venezuela. Success will be much more likely if Venezuela is able to instill confidence in the market by expeditiously settling past debts and providing concrete assurances that airlines will not face any blockages to future repatriation of funds.


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