The International Air Transport Association (IATA) reported a 28% reduction in the amount of airline budget blocked for repatriation through governments. The total budget frozen at the end of April 2024 amounted to approximately $1. 8 billion, a relief of $708 million (28%) since December 2023.
The air transport industry framework reiterated its call on governments to remove all barriers that prevent airlines from repatriating their revenue from ticketing and other activities in accordance with foreign agreements and treaty obligations.
The blocking budget relief “is a positive development,” said Willie Walsh, IATA’s director general, but $1. 8 billion remains, a challenge that is “important and wants to be addressed urgently. “
The effective repatriation of airline revenues is guaranteed in bilateral agreements and is a prerequisite for airlines to be able to offer economically critical connectivity.
“No business can operate in the long term without legitimately earned revenue,” Walsh says.
Most important to the relief is a significant release of the frozen budget in Nigeria. Egypt also approved the authorization of its gigantic accumulation of blocked budget.
However, IATA notes that in some cases, airlines have been affected by the devaluation of the Egyptian pound and the Nigerian naira.
At its peak in June 2023, Nigeria’s locked budget amounted to $850 million, affecting the operations and finances of the country’s airlines.
Airlines have struggled to repatriate their U. S. dollar earnings, and the increased volume of budget locked up has led some airlines to reduce their operations and one airline to temporarily suspend operations in Nigeria, severely affecting the country’s aviation industry.
IATA notes that, as of April 2024, 98% of that budget has already been settled. The remaining $19 million is due to the Central Bank’s ongoing verification of notable term loans deposited through advertising banks, he said.
IATA commends the new Nigerian government and the Central Bank of Nigeria for their efforts to tackle this problem, which will mean that “individual Nigerians and the economy will benefit from reliable air connectivity for which a source of revenue is essential,” says Mr Walsh.
“We are on the right track and we urge the government to allocate the remaining $19 million and continue to prioritize aviation,” he added.
Data from CAPA – Aviation Centre and OAG highlights that capacity in the Nigerian market has an inconsistent profile. It peaked at more than six million seats in 2014 and 2015 before falling, to nearly six million in 2018, before retreating, even before the COVID-19 pandemic.
It returned above five million seats in 2022, with a paltry 2. 4% increase in 2023; However, strong functionality in the first quarter of 2024 will most likely lead to an increase in foreign capacity in 2024.
At the beginning of June 2024, Ethiopian Airlines was the largest foreign airline serving Nigeria, ahead of Qatar Airways, British Airways, and Turkish Airlines. Although local airline Air Peace is the largest foreign operator in Nigeria, foreign airlines account for 85. 4% of the country’s air traffic. External connectivity.
Following the liquidation of the frozen budget in Nigeria and Egypt, eight countries now account for 87 per cent of the total frozen budget, or $1. 6 billion out of a total of $1. 8 billion. Algeria, Ethiopia, Lebanon, Eritrea and Zimbabwe are on the list, with the latter two countries having the budget for the longest period.
The situation is “dire” in Pakistan and Bangladesh, IATA says, where airlines are unable to repatriate $731 million ($411 million in Pakistan and $320 million in Bangladesh) of profits made in those markets.
Walsh said Pakistan and Bangladesh “need to release” the blocked budget to ensure airlines can “continue to provide essential air connectivity. “
In Bangladesh, the solution lies in the hands of the Central Bank, which, according to IATA, will have to “prioritize the aviation sector’s access to foreign currency,” in line with foreign treaty obligations. The solution in Pakistan, he says, is to locate “effective opportunities for the audit certificate formula and tax exemptions,” which causes long processing delays.
According to the knowledge of CAPA – Aviation Center and OAG for the first week of June 2024, foreign airlines account for a capacity point in Pakistan and Bangladesh – 60. 1% and 60. 2% of foreign capacity, respectively. Middle Eastern carriers Emirates Airline, Qatar Airways, Air Arabia, Saudia and flydubai are the largest foreign carriers in those markets.
The International Air Transport Association (IATA) reported a 28% reduction in the amount of airline budget blocked for repatriation through governments. The total budget frozen at the end of April 2024 amounted to approximately $1. 8 billion, a relief of $708 million (28%) since December 2023.
The air transport industry framework reiterated its call on governments to remove all barriers that prevent airlines from repatriating their revenue from ticketing and other activities in accordance with foreign agreements and treaty obligations.
The blocking budget relief “is a positive development,” said Willie Walsh, IATA’s director general, but $1. 8 billion remains, a challenge that is “important and wants to be addressed urgently. “
The effective repatriation of airline revenues is guaranteed in bilateral agreements and is a prerequisite for airlines to be able to offer economically critical connectivity.
“No business can operate in the long term without legitimately earned revenue,” Walsh says.
Most important to the relief is a significant release of the frozen budget in Nigeria. Egypt also approved the authorization of its gigantic accumulation of blocked budget.
However, IATA notes that in some cases, airlines have been affected by the devaluation of the Egyptian pound and the Nigerian naira.
At its peak in June 2023, Nigeria’s locked budget amounted to $850 million, affecting the operations and finances of the country’s airlines.
Airlines have struggled to repatriate their U. S. dollar earnings, and the increased volume of budget locked up has led some airlines to reduce their operations and one airline to temporarily suspend operations in Nigeria, severely affecting the country’s aviation industry.
IATA notes that, as of April 2024, 98% of that budget has already been settled. The remaining $19 million is due to the Central Bank’s ongoing verification of notable term loans deposited through advertising banks, he said.
IATA commends the new Nigerian government and the Central Bank of Nigeria for their efforts to tackle this problem, which will mean that “individual Nigerians and the economy will benefit from reliable air connectivity for which a source of revenue is essential,” says Mr Walsh.
“We are on the right track and we urge the government to allocate the remaining $19 million and continue to prioritize aviation,” he adds.
Data from CAPA – Aviation Centre and OAG highlights that capacity in the Nigerian market has an inconsistent profile. It peaked at more than six million seats in 2014 and 2015 before falling, to nearly six million in 2018, before retreating, even before the COVID-19 pandemic.
It returned above five million seats in 2022, with a paltry 2. 4% increase in 2023; However, strong functionality in the first quarter of 2024 will most likely lead to an increase in foreign capacity in 2024.
Nigeria: Foreign Seat Capacity (2022 – 2024 from the beginning of the year)
Source: CAPA – Centre de l’Aviation and OAG.
At the beginning of June 2024, Ethiopian Airlines was the largest foreign airline serving Nigeria, ahead of Qatar Airways, British Airways, and Turkish Airlines. Although local airline Air Peace is the largest foreign operator in Nigeria, foreign airlines account for 85. 4% of the country’s air traffic. External connectivity.
Following the liquidation of the frozen budget in Nigeria and Egypt, eight countries now account for 87 per cent of the total frozen budget, or $1. 6 billion out of a total of $1. 8 billion. Algeria, Ethiopia, Lebanon, Eritrea and Zimbabwe are on the list, with the latter two countries having the budget for the longest period.
Eight countries have frozen 87% of the budget
Source: International Air Transport Association (IATA).
The situation is “dire” in Pakistan and Bangladesh, IATA says, where airlines are unable to repatriate $731 million ($411 million in Pakistan and $320 million in Bangladesh) of profits made in those markets.
Walsh said Pakistan and Bangladesh “need to release” the blocked budget to ensure airlines can “continue to provide essential air connectivity. “
In Bangladesh, the solution lies in the hands of the Central Bank, which, according to IATA, will have to “prioritize the aviation sector’s access to foreign currency,” in line with foreign treaty obligations. The solution in Pakistan, he says, is to locate “effective opportunities for the audit certificate formula and tax exemptions,” which causes long processing delays.
According to the knowledge of CAPA – Aviation Center and OAG for the first week of June 2024, foreign airlines account for a capacity point in Pakistan and Bangladesh – 60. 1% and 60. 2% of foreign capacity, respectively. Middle Eastern carriers Emirates Airline, Qatar Airways, Air Arabia, Saudia and flydubai are the largest foreign carriers in those markets.