On Sunday, the global airline association, the International Air Transport Association (IATA), warned that rapidly rising levels of trapped revenue funds were a threat to airline connectivity in Nigeria and some affected countries.
IATA disclosed that the industry’s trapped funds had increased by 47 percent to $2.27 billion in April 2023 from $1.55 billion in April 2022.
“Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation,” IATA’s Director General, Willie Walsh, said.
According to the global airline body, the top five countries account for 68 percent of blocked funds. These comprise Nigeria ($812.2m), Bangladesh ($214.1m), Algeria ($196.3m), Pakistan ($188.2m), and Lebanon ($141.2m).
IATA urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate these funds arising from the sale of tickets, cargo space, and other activities.
Speaking at the 79th Annual General Meeting and World Air Transport Summit in Istanbul on Sunday, the Regional Vice President, Africa and Middle East, IATA, Kamil Alawadhi, said the figure had risen to $812 million as of April 2023.
He said IATA was making headway with the Nigerian government on the repatriation of blocked funds until December last year, when preparations for the general elections stalled the process. This, he said, had led to a significant increase in blocked funds in the country.
He said with the inauguration of the Bola Tinubu-led government, the global airline body will meet with representatives of the new administration with a view to clearing the backlog of blocked funds.
Alawadhi said he expects the new government to clear 50 percent of the trapped funds immediately and then put in place machinery to clear the remaining 50 percent in a couple of months.
According to the IATA VP, airlines blocked funds have led to a negative perception of Nigeria in the global investment community, a situation that has made many investors shun the country.
The sad development, he said, had also led to high ticket prices in Nigeria.
“Every penny counts; airlines have been affected by the pandemic. Airlines need funds to run their operations smoothly. We will engage the new government in Nigeria to get the blocked funds repatriated as quickly as possible,” he said.
“This situation means that airlines are increasingly unable to repatriate their commercial revenues from the affected markets, thereby making it challenging for them to continue providing the critical connectivity that drives economic activity and job creation worldwide.”
According to Alawadhi, Africa accounts for 18 percent of the global population but just 2.1 percent of air transport. As such, he said IATA was focusing on closing this gap.
IATA intends to achieve this by improving air safety, aviation infrastructure, air connectivity, finance and distribution, sustainability, and future skills.
Meanwhile, Walsh reiterated the point and urged governments to collaborate with industry players to address this unfolding crisis over trapped funds.
The IATA DG said, “Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”
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