The International Airline Industry’s Cry for Help, a global airline organization based in Switzerland, has issued a warning regarding the escalating levels of blocked funds, which pose a significant threat to airline connectivity in Nigeria and other affected countries. According to IATA, the industry’s blocked funds have surged by 47 percent to $2.27 billion in April 2023, compared to $1.55 billion in April 2022.
IATA’s Director General, Willie Walsh, emphasized the importance of resolving this situation, stating that airlines cannot sustain operations in markets where they are unable to repatriate the revenue generated from their commercial activities. He called on governments to collaborate with the industry in finding a solution, enabling airlines to continue providing vital connectivity that drives economic growth and job creation.
The global airline body revealed that the top five countries account for 68 percent of the blocked funds. These countries include Nigeria with $812.2 million, followed by Bangladesh with $214.1 million, Algeria with $196.3 million, Pakistan with $188.2 million, and Lebanon with $141.2 million.
IATA urged governments to adhere to international agreements and treaty obligations, facilitating the repatriation of funds arising from ticket sales, cargo services, and other airline activities. Kamil Alawadhi, the Regional Vice President for Africa and the Middle East at IATA, highlighted that the blocked funds in Nigeria had reached $812 million as of April 2023.
Alawadhi mentioned that IATA had been making progress in resolving the issue with the Nigerian government until preparations for the general elections in December last year interrupted the process. Consequently, there has been a significant increase in the amount of blocked funds in the country.
With the newly inaugurated government led by Bola Tinubu, IATA plans to engage with the administration to address the backlog of blocked funds. Alawadhi expressed hope that the new government would promptly clear 50 percent of the trapped funds and establish a mechanism to resolve the remaining 50 percent within a few months.
The IATA Vice President emphasized that the airline industry’s blocked funds had created a negative perception of Nigeria among the global investment community, leading to investors avoiding the country. Furthermore, the situation has resulted in high ticket prices within Nigeria.
Alawadhi emphasized that airlines heavily rely on their funds to operate smoothly, especially considering the challenges posed by the ongoing pandemic. The inability to repatriate commercial revenues from affected markets makes it increasingly difficult for airlines to provide essential connectivity, which drives economic activity and job creation worldwide.
In addition to addressing the blocked funds issue, IATA is also focused on closing the significant gap between Africa’s air transport capacity and its population size. Currently, Africa accounts for 18 percent of the global population but only 2.1 percent of air transport. To achieve this goal, IATA aims to enhance air safety, aviation infrastructure, air connectivity, finance and distribution systems, sustainability efforts, and future skills development as the Airline Industry’s Cry for Help.
Walsh reiterated the urgency of the matter and called on governments to collaborate with industry players to address this unfolding crisis concerning trapped funds. He emphasized that governments must work together with the industry to find a resolution, ensuring that airlines can continue to provide vital connectivity, which is crucial for driving economic activity and job creation.
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