Airlines Call On Governments To Release $6 Billion In Trapped Revenues

The world’s trade body for airlines, the International Air Transport Association (IATA), has said that close to $6 billion of its members’ assets are currently trapped in more than 27 countries and territories around the world.

According to the organisation, the figure has risen by $395 million in the past six months alone. It has called on governments to lift the barriers which are currently preventing airlines from repatriating the revenues they earn from sales of passenger tickets, cargo space and other activities.

The issue previously hit the headlines in early November, when Dubai-based Emirates – one of the world’s largest international airlines – again suspended flights to and from Nigeria due to the amount of trapped funds there. The carrier had only resumed its services to the country in September, after some funds had been released.

IATA director general Willie Walsh has warned that more airlines could pull out of some countries if the situation did not start to improve.

“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,” he said. “No business can sustain providing service if they cannot get paid and this is no different for airlines.”

The worst offender is Venezuela, where some $3.8 billion of airline funds are currently blocked, a figure which has been building up for many years.

The government in Caracas implemented currency controls in 2003, which required airlines to seek official approval to move funds out of the country. By 2013, the value of requests started to outpace approvals. There was just one approval in 2015 and the last time any repatriation of funds was authorized was in early 2016, according to IATA.

Close to $2 billion is trapped in other parts of the world, with the most problematic countries spread across Africa, Asia and the Middle East.

Around $551 million in revenues are currently blocked in Nigeria, while a further $225 million of funds are trapped in Pakistan and $208 million in Bangladesh. There are also significant problems for airlines in Lebanon and Algeria, where $144 million and $140 million respectively are blocked.

IATA said the Nigerian authorities has been talking to airlines to find ways to resolve the situation there – which began in March 2020 when demand for foreign currency in the country started to outstrip supply and the country’s banks were not able to service currency repatriations.

Getting worse not better

The situation has got far worse over the past year. In August 2021, IATA said that, excluding Venezuela, around $1 billion of airline revenues were blocked in around 20 countries.

At the time, the worst offender was Bangladesh, where just over $146 million was being held. It was followed by Lebanon ($175.5 million in trapped funds), Nigeria ($143.8 million) and Zimbabwe ($142.7 million).

Most of the problems are in the Middle East and Africa – these regions accounted for 16 of the 23 countries listed by IATA in September for blocking funds. Elsewhere in the world, airlines have also experienced difficulties in repatriating funds from Russia and Ukraine this year – a consequence of the international sanctions imposed on Moscow followings its invasion of its neighbor in February.