The International Air Transport Association (IATA) has said that Nigeria is an example of how government-industry engagement can resolve blocked funds issues.
IATA’s reaction is coming on the heels of the close to $2.0 billion airlines funds trapped in many countries out of which a total of $551 million is blocked by Nigerian authorities.
This is just as it warned that the amount of airline funds for repatriation being blocked by governments has risen by more than 25 per cent ($394 million) in the last six months.
According to IATA, the total funds blocked now tally at close to $2.0 billion.
The airline body called on governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities, in line with international agreements and treaty obligations.
IATA also renewed its calls on Venezuela to settle the $3.8 billion of airline funds that have been blocked from repatriation since 2016 when the last authorisation for limited repatriation of funds was allowed by the Venezuelan government.
According to IATA, Director General, Willie Walsh, “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. No business can be sustained providing service if they cannot get paid and this is no different for airlines. Air links are a vital economic catalyst. Enabling the efficient repatriation of revenues is a critical for any economy to remain globally connected to markets and supply chains.”
IATA lamented that airline funds are being blocked from repatriation in more than 27 countries and territories.
It listed the top five markets with blocked funds (excluding Venezuela) to include:
- Nigeria: $551 million
- Pakistan: $225 million
- Bangladesh: $208 million
- Lebanon: $144 million
- Algeria: $140 million
On Nigeria , IATA said that the total airline funds blocked from repatriation in Nigeria are $551 million.
- It added that repatriation issues arose in March 2020 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations.
IATA said that despite these challenges Nigerian authorities have been engaged with the airlines and are, together with the industry, working to find measures to release the funds available.
According to the Regional Vice President for Africa and the Middle East, Kamil Al-Awadhi, “Nigeria is an example of how government-industry engagement can resolve blocked funds issues. Working with the Nigerian House of Representatives, Central Bank and the Minister of Aviation resulted in the release of $120 million for repatriation with the promise of a further release at the end of 2022. This encouraging progress demonstrates that, even in difficult circumstances, solutions can be found to clear blocked funds and ensure vital connectivity,”
IATA said that in Venezuela airlines have also restarted efforts to recover the $3.8 billion of unrepatriated airline revenues in Venezuela. There have been no approvals of repatriation of these airline funds since early 2016 and connectivity to Venezuela has dwindled to a handful of airlines selling tickets primarily outside the country.
It added that between 2016 and 2019 (the last normal year before COVID-19) connectivity to/from Venezuela plummeted by 62 per cent. Venezuela, the international body said is now looking to bolster tourism as part of its COVID-19 economic recovery plan and is seeking airlines to restart or expand air services to/from Venezuela. IATA posited that success will be much more likely if Venezuela is able to instill confidence in the market by expeditiously settling past debts and providing concrete assurances that airlines will not face any blockages to future repatriation of funds.