The International Air Transport Association (IATA) has expressed concerns that Pakistan and Bangladesh have held up airline revenues worth up to $720 million, calling on both countries to release funds into carriers’ coffers, noting that airlines already operate on thin margins.
According to IATA, the situation has become severesince airlines cannot collect over $720 million in revenue from Pakistan ($399 million) and Bangladesh ($323 million), with the funds being held in contravention of international agreements. The association proposed two changes to the countries’ regulations, calling on Pakistan to simplify the process for repatriating funds.
Currently, it includes the requirement to provide audit and tax exemption certificates, both of which can cause unnecessary delays in receiving cash from passengers. IATA pointed out that while Bangladesh has more standardised processes, aviation needs a higher priority from the Central Bank to facilitate access to foreign exchange funds.
Philip Goh, the Vice President for Asia-Pacific at IATA, said that the timely return of the funds to their home countries is critical for the payment of dollar-denominated expenses, including leases for aircraft and/or engines, spare parts, overflight fees, and fuel. Goh stated that IATA was aware of the challenges these countries face when strategically deciding how to use foreign currencies. However, the association’s executive noted that airlines operate on razor-thin margins, which forces them to prioritise markets based on their confidence in being able to pay their expenses with revenues that are released on time and efficiently.
