IATA has renewed calls for governments to urgently remove barriers from airlines repatriating revenues after latest data revealed a $708 billion reduction in the total amount held.

The 28% reduction in blocked funds since December 2023 as of April took the total amount being held to $1.8 billion. The figure was revealed at the trade body’s 80th AGM in Dubai.

IATA said governments must remove barriers for repatriating funds from ticket sales and other activities in accordance with international agreements and treaty obligations.

Willie Walsh, IATA director general, said: “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.”

IATA said the main driver of the reduction was a significant clearance of funds blocked in Nigeria. Egypt also approved the clearance of its “significant accumulation” of blocked funds.

However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira, the association said.

At its peak in June 2023, Nigeria’s blocked funds amounted to $850 million, significantly impacting airline operations and finances in the country.

Carriers faced difficulties in repatriating revenues in US dollars, and the high volume of blocked funds led some airlines to reduce their operations and one carrier to temporarily cease operations to Nigeria.

As of April 2024, 98% of these funds have been cleared. The remaining $19 million is due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks.

Walsh added: “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.”

Just eight countries account for 87% ($1.6 billion of the total blocked funds. The highest amounts are being held in Pakistan and Bangladesh, with Algeria countries in the XAF central African currency union, Ethiopia, Lebanon, Eritrea and Zimbabwe on the list.

IATA described the situation in Pakistan and Bangladesh as “severe” with airlines unable to repatriate a total of $731 million.

Walsh said: “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 prioritise 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.”

Article source: https://airlines.einnews.com/article/716635296/Ka2NcFn-nrFP4e88?ref=rss&ecode=vaZAu9rk30b8KC5H

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