The International Air Transport Association (IATA) reported that as of late April, airlines were unable to repatriate $1.3 billion (€1.116 billion) in funds held in various countries, with Mozambique leading the list at that time with $205 million (€176 million).
In an update released today, IATA indicates that these blocked funds had decreased to $1.2 billion (€1.03 billion) by October. Mozambique, previously in the top spot, dropped to fourth place with $91 million (€78.2 million), followed by Angola at $81 million (€69.6 million). Algeria now tops the list with $307 million (€263.7 million).
“Of the total reported blocked funds, 93% are retained in Africa and the Middle East. IATA has urged governments to lift all restrictions on foreign exchange repatriation and allow airlines to access their revenues in US dollars from ticket sales, cargo sales, and other activities, as guaranteed in bilateral air service agreements and treaty obligations,” the organization stated.
Additionally, the statement highlights that these “restrictions include burdensome or inconsistent procedures for repatriation approval, delays in obtaining approval, foreign currency shortages, among other limitations imposed by governments or central banks.”
“Airlines need reliable access to their US dollar revenues to keep operations running, pay their bills, and maintain vital air connectivity,” said IATA’s Director-General, quoted in the statement.
Willie Walsh noted that, “with thin margins and significant costs” in foreign currency, airlines “depend” on government commitments: “It is also in the interest of governments to foster the economic catalyst that airlines provide, connecting economies globally. This is why we urge governments to facilitate the efficient repatriation of airline funds and prioritize this in foreign currency allocations, even when there is a scarcity of foreign exchange.”
The Confederation of Economic Associations (CTA) of Mozambique had already warned on February 18 that the lack of foreign currency in the market was leading airlines to limit their activity in the country, calling for urgent measures.
“Airlines are starting to pull out of the Mozambican market because they cannot repatriate their capital and cover the costs involved in their operation, which is natural. Once a business becomes unsustainable, any reasonably prepared manager must take action,” said Muhammad Abdullah, then head of Tourism at the CTA, in a press conference.
Without access to currency in the exchange market, airlines began to take measures, initially offering fares in meticais (Mozambican currency) “more expensive” than in foreign currency, then reducing frequencies and cutting sales in the Mozambican market.
At that time, Abdullah highlighted Ethiopian Airlines as an example, which maintained operations to Mozambique but “blocked” sales in the country, which can only be made from abroad, in foreign currency.
“Considering the country’s potential and resources, this is concerning,” Abdullah admitted.
