The International Air Transport Association (IATA) has issued a warning about financial crisis in Pakistan as the international airlines are finding it difficult to repatriate their dues, paid in dollars from the country. The Pakistan Civil Aviation Authority (PCAA) has stated that it has been in touch with the appropriate authorities and is working to pay the airlines on time.
As per IATA records, $290 million are stuck in Pakistan as of January 2023, which increased by almost a third since December 2022.
Speaking to the financial times, Philip Goh, Asia-Pacific head, IATA said: “Airlines are facing long delays before they are able to repatriate their funds. 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," Goh added.
In December 2022, IATA said that Pakistan has blocked $225 million it owed to international airlines, making it one of the top markets where airline funds have been blocked from repatriation.
Currently, Pakistan's foreign exchange reserve has hit a low-mark of $4.3bn. The ongoing financial crisis has also hit the aviation industry in the country as the airlines sell tickets in local currency but repatriate dollars to pay for expenses such as fuel costs.
As per Cirium data, foreign airlines have been reluctant to return to Pakistan, with fewer total flights scheduled for March 2023 than in the month in 2019.
Virgin Atlantic suspended its flight operations in Pakistan from February 2023 citing operational revamp as the reason, but sources close to the airline has claimed that the airline’s decision is based on the economic condition of the nation.
Meanwhile, the PCAA is trying to bring the situation in order with continued talks with the banks and finance ministry for on-time payment to airlines.