IATA Calls for Release of Over $720M Airline Revenues Blocked by Pakistan and Bangladesh

By Ivan PetrenkoApr 26, 2024 15:30 PMNews
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An airplane taking off during sunset
An airplane taking off during sunset. Source: unsplash

The International Air Transport Association (IATA) has urged Pakistan and Bangladesh to release airline revenues amounting to over $720 million, which have been held in violation of international agreements. The revenues, totaling $399 million in Pakistan and $323 million in Bangladesh, have been blocked, creating significant challenges for airlines in those regions.

Airlines rely on the timely repatriation of revenues to cover costs such as lease agreements, spare parts, overflight fees, and fuel. Philip Goh, IATA's Regional Vice President for Asia-Pacific, emphasized that the failure to release these funds not only violates international agreements but also poses risks to airlines due to fluctuating exchange rates. He urged both Pakistan and Bangladesh to release the blocked revenues immediately to maintain air connectivity in the region.

Pakistan's process for repatriation is considered overly complex, requiring audit certificates and tax exemption certificates, leading to unnecessary delays. In contrast, Bangladesh has more standardized procedures, but the aviation industry needs greater priority from the Central Bank to ensure access to foreign exchange.

Given the airline industry's razor-thin profit margins, these blocked revenues have a significant impact on the market. Airlines must make critical decisions about which markets to serve based on their ability to cover expenses with timely remittance of revenues. Reduced air connectivity resulting from such financial constraints could limit economic growth, foreign investment, and exports.

The immediate release of these funds is crucial for ensuring airlines can continue to operate efficiently in these regions. As both Pakistan and Bangladesh rely heavily on air connectivity for their economies, resolving this issue promptly would benefit not only the airlines but also the broader economic landscape.

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