Airlines struggle to repatriate dollars from cash-starved Pakistan: FT
Business
PCAA says it's trying to pay the airlines on time
LAHORE (Web Desk) - The International Air Transport Association (IATA) has warned that an aviation crisis could hit Pakistan as airlines are battling to recover $290 million owing to a severe financial crisis, the Financial Times has reported.
Pakistan Civil Aviation Authority (PCAA) says it's trying to pay the airlines on time and has been in contact with relevant authorities over the issue.
Quoting the IATA, the Financial Times said it has become “very challenging” for carriers to serve Pakistan as they struggle to repatriate their dues which are paid in dollars.
The IATA, which represents some 300 airlines comprising 83 per cent of global air traffic, said $290m were stuck in Pakistan as of January up by almost a third since December.
“Airlines are facing long delays before they are able to repatriate their funds,” Philip Goh, the IATA’s Asia-Pacific head, was quoted as saying by FT. “Some airlines still have funds stuck in Pakistan from sales in 2022.”
“If conditions persist that make the economics of operation to a country unsustainable, one would expect airlines to put their valued aircraft assets to better use elsewhere,” Mr Goh added.
In December 2022, the global aviation body said Pakistan has blocked $225m it owed to international airlines, making it one of the top markets where airline funds have been blocked from repatriation.
The development coincided with Pakistan’s balance of payment crisis with fast-depleting foreign exchange reserves, standing at a low mark of $4.3bn.
The ongoing crisis has also hit the aviation industry where airlines sell tickets in local currency but repatriate dollars to pay for expenses such as fuel costs.
The FT, citing data from an aviation analytics company Cirium, shared that foreign airlines have been reluctant to return to Pakistan, with fewer total flights scheduled for March 2023 than the same month in 2019.
“If you can’t take money out of a country, then there’s no point in you even going there,” said Mark Martin, chief executive of aviation consultancy Martin Consulting, in the FT report.
Virgin Atlantic announced the suspension of its operations in Pakistan in February this year.
Although the airline said the decision was part of its plan to revamp operations, the FT, citing a person familiar with the matter, said the decision was based on the economics of the route.
