IATA Announces Significant Reduction In Blocked Airline Funds To $1.8 Billion

Sunday, June 2, 2024

The International Air Transport Association (IATA) has announced a 28% reduction in the volume of airline funds withheld for repatriation by governments, with the total amount of blocked funds as of the end of April being approximately $1.8 billion. This reflects a decrease of $708 million since December 2023.

IATA has reiterated its appeal to governments to eliminate all obstacles preventing airlines from repatriating their revenues from ticket sales and other operations, in line with international agreements and treaty obligations.

“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,” said Willie Walsh, IATA’s Director General. 

The notable decrease was primarily due to substantial releases of blocked funds in Nigeria. Similarly, Egypt authorized the clearance of its considerable backlog of blocked funds. In both scenarios, the devaluation of the Egyptian Pound and the Nigerian Naira negatively impacted airlines.

Progress in Nigeria
In June 2023, the peak of blocked funds in Nigeria reached $850 million, profoundly disrupting airline operations and financial health in the region. Challenges in transferring revenues in US dollars and the high amount of blocked funds compelled some airlines to scale down their operations, and one airline temporarily halted its service to Nigeria, significantly affecting the nation’s aviation sector. By April 2024, 98% of these funds had been released, leaving $19 million pending due to the Central Bank’s verification of outstanding forward claims by commercial banks.

“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,” said Walsh.  

Eight countries are responsible for holding 87% of total blocked funds, which totals $1.6 billion.

Here is a breakdown of the funds by country:

• Pakistan: $411 million held for 40 months
• Bangladesh: $320 million held for 40 months
• Algeria: $286 million held for 37 months
• XAF Zone: $151 million held for 50 months
• Ethiopia: $149 million held for 58 months
• Lebanon: $129 million held for 52 months
• Eritrea: $75 million held for 116 months
• Zimbabwe: $69 million held for 84 months

Pakistan and Bangladesh
The repatriation crisis has intensified in Pakistan and Bangladesh, where airlines are unable to transfer $731 million of their earned revenues ($411 million in Pakistan and $320 million in Bangladesh).

“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 prioritize 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,” said Walsh.