The global airline industry is facing a severe economic challenge, as $1.7 billion in airline funds remain blocked from repatriation by various governments, according to the International Air Transport Association (IATA). This marks a slight improvement from the $1.8 billion reported in April 2024, but the underlying issue persists, threatening aviation connectivity and economic prosperity worldwide.
Willie Walsh, IATA’s Director General, emphasized the gravity of the situation:
“Over the last six months, we have seen significant reductions in blocked funds in Pakistan, Bangladesh, Algeria, and Ethiopia. At the same time, amounts are rising in the XAF/XOF zones and Mozambique. Bolivia has also emerged as a problem, where repatriating sales revenues is becoming increasingly difficult and unsustainable for airlines. This unfortunate game of ‘whack-a-mole’ is unacceptable. Governments must remove all barriers for airlines to repatriate their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.”
The Economic Toll of Blocked Funds
Governments in nine countries account for 83% of the industry’s blocked funds, a staggering $1.43 billion. The most impacted regions include the XAF (Central African Franc) and XOF (West African Franc) zones, with mounting challenges in Pakistan, Lebanon, and Mozambique.
Country Breakdown:
- Pakistan: Tops the list with $311 million held for over 48 months, primarily due to delays caused by audit and tax exemption processes.
- Bangladesh: Funds decreased to $196 million, but access to foreign exchange remains a critical concern.
- XAF Zone (Central Africa): Holds $235 million, with funds stuck for up to 60 months.
- Mozambique: Reports a troubling increase, now holding $127 million over 47 months.
- Lebanon: Holds $142 million, with funds blocked for as long as 60 months.
African nations collectively account for nearly $1 billion, or 59% of the global total. While countries like Algeria and Ethiopia have made strides in reducing blocked funds, others, including Mozambique and the XOF zone, have significantly increased.
The Rising Risk to Aviation Connectivity
The inability to repatriate funds is more than a financial issue; it jeopardizes the connectivity that underpins global trade and tourism. Airlines unable to access their earnings may be forced to reduce or suspend operations in affected markets, with devastating consequences for local economies.
Walsh underscored the long-term risks:
“No country wants to lose aviation connectivity, which drives economic prosperity. But if airlines cannot repatriate their revenues, they cannot be expected to provide a service. Economies will suffer if connectivity collapses. So, it is in everyone’s interest, including governments, to ensure that airlines can repatriate their funds smoothly.”
A Call for Action
IATA has repeatedly urged governments to honour international agreements and treaty obligations to address this escalating crisis. However, the issue remains a global game of “whack-a-mole,” as worsening conditions in others offset improvements in some regions.
For instance, Bolivia has recently emerged as a new problem area, with $42 million in blocked funds due to worsening access to foreign exchange, particularly U.S. dollars.
The aviation industry is not alone in its demand for resolution. Businesses reliant on global connectivity, from tourism operators to trade partners, also call for swift action. The ripple effects of restricted airline operations extend far beyond airports, impacting economies at every level.
The Path Forward
As blocked funds continue to rise in key markets, the airline industry’s ability to serve these regions hangs in the balance. Governments must take decisive action to align with international norms and ensure that the aviation sector can continue to drive economic growth and global connectivity.
With over $1.7 billion at stake, the time for collaborative solutions is now. Without immediate intervention, the economic and social costs could spiral, leaving long-lasting scars on the global economy.
For more on IATA’s ongoing efforts to address this issue, visit IATA.org.
Written by: Anne Keam
