The International Air Transport Association (IATA) has reported significant progress by Nigeria in releasing trapped airline funds, announcing that 98% of these funds have now been paid. IATA’s Director General, Willie Walsh, called for the final clearance of the remaining 2%.
Walsh highlighted a 28% overall reduction in blocked airline funds globally, with the total standing at approximately $1.8 billion by the end of April 2024. This marks a $708 million decrease since December 2023.
Reflecting on Nigeria’s situation, Walsh noted that the peak of the crisis in June 2023 saw $850 million of airline funds blocked in the country, severely impacting airline operations and finances. The bulk of these funds have since been repatriated, allowing airlines to resume normal operations.
Despite the progress, $19 million remains trapped due to ongoing verification by the Central Bank of Nigeria (CBN) of outstanding forward claims filed by commercial banks. Walsh praised the efforts of the new Nigerian government and the CBN, emphasizing the benefits of reliable air connectivity for Nigeria’s economy and citizens.
“We commend the new Nigerian government and the Central Bank of Nigeria for their efforts to resolve this issue. Individual Nigerians and the economy will all benefit from reliable air connectivity for which access to revenues is critical. We are on the right path and urge the government to clear the residual $19 million and continue prioritizing aviation,” said Walsh.
IATA has reiterated its call for all governments to eliminate barriers preventing airlines from repatriating revenues from ticket sales and other activities, in line with international agreements and treaty obligations. Walsh stressed that the remaining $1.8 billion in blocked funds globally is significant and needs urgent attention to ensure airlines can continue providing essential connectivity.
“The reduction in blocked funds is a positive development. The remaining $1.8 billion, however, is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements. Even more importantly, it is a pre-requisite for airlines—who operate on thin margins—to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues,” Walsh added.
The primary driver of the reduction was Nigeria’s significant clearance of blocked funds. Egypt also made progress by approving the clearance of its accumulation of blocked funds, although airlines in both countries were adversely affected by the devaluation of their currencies, Walsh noted.
IATA revealed that eight countries account for 87% of the total blocked funds, amounting to $1.6 billion. The situation is particularly severe in Pakistan and Bangladesh, where airlines are unable to repatriate $731 million—$411 million in Pakistan and $320 million in Bangladesh.
“Pakistan and Bangladesh must release the $731 million in blocked funds immediately to ensure airlines can continue providing essential air connectivity. In Bangladesh, the solution is in the hands of the Central Bank, which must prioritize aviation’s access to foreign exchange in line with international treaty obligations. The solution in Pakistan is finding efficient alternatives to the system of audit and tax exemption certificates, which cause long processing delays,” said Walsh.