IATA seeks to solve problem of repatriation of airline funds

African nations are among the worst offenders at blocking the repatriation of airline funds, industry body International Air Transport Association (IATA) revealed at its Annual General Meeting (AGM) in Dublin, Republic of Ireland, but Venezuela remains the world’s biggest offender.

More than $5 billion in total is owed to the world’s airlines, $3.8 billion by long-term offender Venezuela, but African nations make up the rest of the top five list of countries with Nigeria blocking $591 million, Sudan $360 million, Egypt $291 million and Angola at $237 million.

The airline body has called on governments to respect international agreements obliging them to ensure airlines are able to repatriate their revenues. The time that the amount has been held varies between four and 16 months, according to IATA.

“Air connectivity is vital to all economies,” said Tony Tyler, director general and chief executive, IATA. "The airline industry is a competitive business operating on thin margins. So the efficient repatriation of revenues is critical for airlines to be able to play their role as a catalyst for economic activity.”

IATA rightfully highlight that it is not reasonable to expect airlines to invest and operate in nations where they cannot efficiently collect payment for their services.

“Blocked funds are a problem in a diverse group of countries, some of them undergoing significant economic challenges particularly with a fall-off in oil revenues,” said Tyler.

“But one thing all five nations have in common is the urgent need for robust air connectivity that is being hampered by airlines’ difficulty in repatriating funds,” he added.

Strong connectivity is an economic enabler and generates considerable economic and social benefits — something that struggling economies need more than ever. “It is in everybody’s interest to ensure that airlines are paid on-time, at fair exchange rates and in full,” said the IATA chief.

The Venezuela issue has been ongoing for some time and although some airlines have received partial payments over recent years, the $3.8 billion debt dates back over a year. Currency controls implemented in 2003 necessitate government approval to repatriate funds, but y 2013, approvals were not keeping pace with the amount of funds requiring repatriation and significant airline revenue accumulated in the country.

“The situation became critical in 2015 when only one request to repatriate funds was approved. So far in 2016 only one request to repatriate funds has been granted,” said IATA.

In Nigeria, repatriation issues started to arise in the second half of 2015 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations. Nigerian authorities are now engaged with the airlines and are, together with the industry, seeking possible measures to make the funds available, according to IATA.

Richard Maslen

Richard Maslen has travelled across the globe to report on developments in the aviation sector as airlines and airports have continued to evolve and…