0
0
The International Air Transport Association (IATA) has warned that international airlines face rising financial pressure. Currently, billions of dollars in ticket revenue remain trapped in some countries because of foreign exchange restrictions.
According to IATA, blocked funds pose a serious risk to global air connectivity and economic growth. In particular, they limit the ability of airlines to operate efficiently.
“Imagine running a business where you sell products but cannot access the revenue. For many airlines, this is a daily reality,” said Thomas Reynaert, IATA Senior Vice President for External Affairs.
Blocked funds occur when airlines earn revenue in local currencies but cannot convert it to US dollars. This happens due to government restrictions or foreign exchange shortages. As a result, airlines cannot use their earnings to cover basic expenses.
How Blocked Funds Affect Airlines
Airlines earn revenue in many countries. However, most major costs such as aircraft leases, fuel, maintenance, and salaries are paid in US dollars at their home bases. Therefore, access to blocked funds is vital for daily operations.
Reynaert explained that countries signing air service agreements should allow airlines to repatriate funds. This step, he said, helps airlines maintain safe and reliable services.
Yet, some countries restrict currency outflows or block access to foreign exchange. Consequently, airlines face serious operational challenges.
By October 2025, airlines worldwide held about USD $1.2 billion in blocked funds. Without timely repatriation, airlines struggle to pay for fuel, leases, salaries, and maintenance.
Blocked funds also expose airlines to currency losses and higher borrowing costs. In addition, they limit investment in new aircraft, route expansion, and sustainability efforts.
The Connectivity Risk Premium
“This situation creates what we call a connectivity risk premium,” Reynaert said. In response, airlines may cut flight frequencies, raise fares, or suspend routes entirely.
Nigeria offers a clear example. At one point, blocked funds reached $850 million. As a result, ticket prices increased sharply. Some airlines suspended flights, while others reduced frequencies or limited ticket sales.
Aviation’s Economic Impact
Air transport plays a major role in the global economy. In fact, every dollar spent on aviation supports wider economic activity.
“In 2023, aviation supported 86.5 million jobs and contributed $4.1 trillion to global GDP,” Reynaert said. Additionally, the sector accounted for 3.9 percent of global output and carried 33 percent of world trade by value, moving goods worth $8 trillion.
