Cash-strapped countries, topped by Venezuela and Angola, have been hit hard by the 2014 commodities price crash and international airlines struggle to repatriate local ticket sales revenues
Iata asks governments to release $5bn in airline revenues
Countries from Angola to Venezuela owe nearly $5 billion (Dh18.4bn) in local ticket sales to international airlines including Lufthansa, Air France-KLM and Emirates as the governments struggle with currency controls.
The total amount of funds blocked by 16 countries, mainly Venezuela, Angola, Sudan, Bangladesh and Zimbabwe, has dropped 7 per cent at the end of 2017 compared to a year ago, the International Air Transport Association said. The industry body renewed calls to the governments to respect international treaties and allow foreign airlines to repatriate these unlocked revenues.
In Venezuela’s case “we do not see in the short run any solution frankly, to be realistic, but we will not give up,” Alexandre de Juniac, director general of Iata, said in a media briefing at the conclusion of the Iata annual meeting in Sydney.
Airlines have been struggling to get ticket revenues out of oil dependent countries such as Angola, Africa’s second-biggest oil producer, after a 2014 collapse in crude oil prices dried up foreign reserves of dollars, euros and major currencies. In 2017, Emirates scaled back its five weekly flights to Angola’s capital Luanda to three citing difficulties in repatriating funds.
Venezuela alone owes $3.78bn to international airlines, followed by Angola where about $386 million remain blocked. Sudan is withholding $170m, followed by Bangladesh with $95m and Zimbabwe with $76m, Iata said.
Venezuela, which has more oil than Saudi Arabia and was once one of the richest economies of Latin America, is now plagued with shortages in basic goods from food to antibiotics. The sharp drop in oil prices in 2014 has led to an economic downward spiral in the country. Inflation exceeded 2,400 per cent in 2017 and would worsen in 2018, the International Monetary Fund estimated.
Mr de Juniac said a solution is unlikely soon in Venezuela, given its deepening economic crisis, but remains hopeful for progress in other countries.
“We are encouraged by the recent developments in Nigeria and Angola, and hope other states will also move quickly to address blocked funds,” he said.
Egypt has already paid in full its obligations to international airlines, while a $600m backlog in Nigeria was cleared and Angola released $120m from the peak of more than $500m it owed, Iata said.