Pakistan facing a threat to airline connectivity due to blocked funds: IATA
The International Air Transport Association
(IATA) has issued a warning that Pakistan, among other countries, is facing a
threat to airline connectivity due to blocked funds. In their statement
released on Sunday, IATA revealed that the industry's blocked funds have
increased by 47% to $2.27 billion in April 2023 compared to $1.55 billion in
April 2022.
According to IATA, airlines cannot sustainably
provide services in markets where they are unable to repatriate their revenues
generated from commercial activities. Willie Walsh, the Director General of
IATA, emphasized the need for governments to collaborate with the industry to
resolve this situation, ensuring airlines can continue offering vital
connectivity that drives economic activity and job creation.
The figures released by IATA indicate that the
top five countries account for 68% of the blocked funds. Pakistan is among
these countries, with blocked funds amounting to $188.2 million. The other
countries mentioned are Nigeria ($812.2 million), Bangladesh ($214.1 million),
Algeria ($196.3 million), and Lebanon ($141.2 million).
IATA, as the representative body of airlines,
called on governments to adhere to international agreements and treaty
obligations, allowing for the repatriation of funds generated from ticket
sales, cargo space, and other activities.
Earlier in March, IATA had warned Pakistan
about the possibility of foreign airlines suspending operations in the
economically struggling country due to prolonged cash payment blockages. At
that time, Pakistan owed foreign airlines approximately $290 million, the
second-highest total after Nigeria.
Philip Goh, IATA's Asia-Pacific regional vice
president, expressed concerns about the challenging operating environment in
Pakistan and suggested that airlines may redirect their aircraft assets to more
favorable destinations if conditions persist.
A study conducted by IATA five years ago
projected that Pakistan could witness a significant increase in air travelers,
reaching 35 million per year by 2038, contributing $9.3 billion to the
country's GDP and supporting around 800,000 jobs. However, critics argue that
successive governments have neglected the country's aviation industry.
Pakistan is currently facing a worsening
financial crisis, with critically low levels of foreign reserves leading to
shortages and escalating prices of essential goods. Airlines, which sell
tickets in the local currency but require repatriation of dollars for expenses
such as fuel, have been particularly affected by these challenges.