Global airlines' blocked payments up 47% to $2.3bn, Iata says

Global airlines are owed $2.3 billion by governments around the world, depriving the aviation industry of much-needed cash, risking reduced air connectivity and damaging investors' perceptions of these economies, the International Air Transport Association (Iata) said on Sunday.

The amount of airline revenue prevented by governments from repatriation has jumped by 47 per cent in the last 12 months, the industry body said at a press briefing in Istanbul.

Nigeria remains the top country where airlines' revenues are stuck, with $812.2 million. Bangladesh followed with $214.1 million, Algeria with $196.3 million, Pakistan with $188.2 million and Lebanon with $141.2 million, Iata data showed.

Algeria has been “slow” in releasing funds, while Lebanon is facing a “complete collapse in the financial industry” but is still working with Iata to resolve the issue, Kamil Al Awadhi, regional vice president of Africa and the Middle East, told reporters at the 79th annual meeting of Iata.

Nigeria has been responsive to Iata's prompts to address the problem until about six months ago, with the election of a new government, he said.

“They still have to look at what they're doing to their own economy and to the aviation industry,” Mr Al-Awadhi said. “This is beginning to bite.”

Blocked remittances have plagued airlines for years but the situation has been exacerbated by the Covid-19 pandemic, which left airlines strapped for cash after about three years of weak travel demand.

“Airlines can't keep funding this … the aviation industry just came out of the worst disaster ever seen in the 100 years it existed, that means they've come out with very little cash, every penny counts now and they can't wait,” Mr Al Awadhi said.

Nigeria's continued blocking of funds is putting airlines in a “tighter position”, with some carriers forced to temporarily suspending or reducing services, because they cannot continue to fund these operations, he said.

Nigeria's decisions to continue blocking funds reduces air connectivity, creates negative perceptions about the business environment, raises ticket prices, discourages investors and hurts the country's travel agents' business, he added.

The Iata official said he hopes the new government in Nigeria will take “positive measures to remedy” the problem as soon as possible.

In March, Emirates airline said it was owed a “substantial” amount in ticket sales revenue by Nigerian authorities, with little progress made so far in repatriating the blocked payments from Africa's most populous nation.

Nigeria's airline issues began in March 2020, when demand for foreign currency in the country outpaced supply and its banks were not able to service currency repatriations.