Due to a significant increase in blocked funds, the International Air Transport Association (IATA) warned about the growing risk to airline operations in multiple countries, including Pakistan. The total industry’s blocked funds rose by 47%, from $1.55 billion in April 2022 to $2.27 billion in April 2023, per the global airline association’s Sunday statement.
IATA emphasized that it is untenable for airlines to maintain services in regions where they cannot repatriate the revenue generated from their commercial operations. Willie Walsh, the association’s director general, called upon governments to collaborate with the industry to find a solution, noting the importance of airlines for fostering economic activities and creating jobs.
The five countries with the most substantial blocked funds, accounting for 68.0% of the total, are Nigeria ($812.2 million), Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million), and Lebanon ($141.2 million).
IATA implored governments to uphold international treaties and agreements, enabling airlines to repatriate these funds from ticket sales, cargo space, and other services.
Earlier in March, the international airline association declared it exceedingly difficult to sustain operations in Pakistan due to challenges in repatriating dollars. This predicament exacerbates the issues faced by foreign companies operating in the country, which is already grappling with a severe financial crisis.
Low foreign reserves in Pakistan have led to a shortage of essential goods and surging prices, contributing to the country’s financial turmoil. Enterprises face difficulties importing or converting currency, and there are looming concerns about potential default risk.
Airlines selling tickets in local currency but requiring dollars for operational fuel costs are particularly affected. In February, Virgin Atlantic announced its departure from Pakistan after only two years, citing economic concerns about the route and problems with repatriating funds.
