The global airline industry body has warned that debt-ridden Pakistan has become “very challenging” for foreign air carriers as USD 290 million of funds were stuck in the country as of January, a media report has said. Pakistan, currently in the throes of a major economic crisis, is grappling with high external debt, a weak local currency and dwindling foreign exchange reserves.
Analysts believe the country is at risk of default. The International Air Transport Association (IATA) said USD 290 million of funds were stuck in the country as of January this year, up nearly a third since December last year, according to the Financial Times newspaper report on Thursday.
Pakistan is holding the second-largest amount of foreign currency from airlines globally, after only Nigeria. “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 in the report. “Some airlines still have funds stuck in Pakistan from sales in 2022,” Goh said. The IATA, which represents around 300 airlines comprising 83 per cent of global air traffic, said it has become “very challenging” for carriers to serve Pakistan as they struggle to repatriate their dues that are paid in dollars, the report said.
Pakistan Civil Aviation Authority (PCAA) has said it was trying to pay the airlines on time and has been in contact with relevant authorities over the issue. In December 2022, the global aviation body said Pakistan has blocked USD 225 million it owed to international airlines, making it one of the top markets where airline funds were blocked from repatriation.
The development comes at a time when Pakistan is staring at a balance of payment crisis, which is currently standing at an abysmal level of USD 4.3 billion. 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 Financial Times, citing data from an aviation analytics company Cirium, reported that foreign airlines were reluctant to return to Pakistan, with fewer flights scheduled for March 2023 compared to 2019.
