In a recent report, the International Air Transport Association (IATA) revealed a significant improvement in the amount of airline funds blocked from repatriation by governments.
The data showed a 28% decrease in blocked funds, with the total amount standing at approximately $1.8 billion by the end of April.
This reduction of $708 million since December 2023 is a positive development, but IATA emphasized the need for governments to remove all barriers to the repatriation of airline revenues.
IATA’s Director General, Willie Walsh, stressed the importance of addressing the remaining $1.8 billion in blocked funds urgently.
The repatriation of airline revenues is guaranteed in bilateral agreements and is crucial for airlines to maintain economically vital connectivity.
With thin profit margins, airlines require access to the revenues they have earned to sustain their operations effectively.
The main factor contributing to the reduction in blocked funds was the clearance of funds previously held in Nigeria. Egypt also approved the clearance of its significant accumulation of blocked funds.
However, the devaluation of the Egyptian Pound and the Nigerian Naira had adverse effects on airlines operating in these countries.
Nigeria experienced a peak of $850 million in blocked funds in June 2023, which severely impacted airline operations and the country’s aviation industry.
However, as of April 2024, 98% of these funds have been cleared, with only $19 million remaining due to the ongoing verification of outstanding forward claims by the Central Bank.
IATA commended the efforts of the Nigerian government and the Central Bank of Nigeria in resolving the issue, emphasizing the benefits of reliable air connectivity for individuals and the economy.
While progress has been made, IATA urged the government to clear the remaining $19 million and continue prioritizing the aviation sector.
Eight countries account for 87% of the total blocked funds, amounting to $1.6 billion. Pakistan and Bangladesh face a severe situation, with airlines unable to repatriate $731 million in revenues earned in these markets ($411 million in Pakistan and $320 million in Bangladesh).
IATA called for the immediate release of these blocked funds to ensure the provision of essential air connectivity.
