Connectivity Continues To Be Threatened By Blocked Funds
ISTANBUL–The escalating levels of blocked funds will continue to damage airline connectivity worldwide, IATA has warned.
The industry’s blocked funds have increased by 47% to $2.27 billion in April 2023, up from $1.55 billion during April 2022. The trapped funds are proceeds of ticket sales made in local currency but blocked due to the nonavailability of foreign exchange to recoup it.
According to IATA forecasts, Nigeria is blocking about $812.2 million of airline funds from the sale of tickets, cargo space and other activities. This represents a rise of more than $350 million on a year ago.
Emirates Airline suspended flights to Nigeria in November 2022 for the second time in three months, citing an inability to repatriate funds from the West African country. In March, the Dubai-based carrier said that “a substantial balance” of blocked funds have yet to be repatriated—and flights would remain suspended until the situation is resolved.
Speaking at the IATA AGM in Istanbul, Turkey, IATA regional VP for Africa and the Middle East Kamil Al-Awadhi said that airlines pulling out of countries would continue to weaken connectivity and lead to higher ticket prices, as well as reducing investor confidence.
IATA found that Bangladesh is the second-worst offender behind Nigeria, blocking some $214.1 million of industry funds. Algeria is third ($196.3 million), Pakistan fourth ($188.2 million), and Lebanon fifth ($141.2 million).
Al-Awadhi also highlighted Ethiopia, which is blocking around $130 million of funds. He said that Ethiopian Airlines, Africa’s biggest airline, could therefore be affected and called on the country’s government to take action.