Global airlines owed $646m in blocked funds, Iata says

About half of the total owed is withheld by five African countries

An Airbus SE A380 aircraft operated by Qantas Airways Ltd. approaches to land at Sydney Airport in Sydney, Australia, on Thursday, Feb. 21, 2019. Qantas' international business is bearing the brunt of higher fuel costs, which are shredding the division's profit margin. Photographer: Brendon Thorne/Bloomberg
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International airlines have $646 million (Dh2.3 billion) in revenues blocked in cash-strapped countries, with more than half that amount withheld by African nations, according the International Air Transport Association (Iata).

Of the total owed to airlines, $413m is blocked by African countries, and the issue could threaten air links to the continent, Mr Muhammad Al Bakri, Iata's regional vice president for Africa and the Middle East, told reporters in Seoul during the association's 75th annual meeting. The top five African countries withholding funds are Zimbabwe, Sudan, Algeria, Angola and Eritrea.

"Anybody who operates into these countries where repatriating funds is difficult has been affected because of the cash flow," Mr Albakri said. "Without cash flow, operators will start reducing frequency, cancel flights and abandoning operations at the end of the day."

A global commodities price crash that started in 2014 has hit African economies hard. Low mineral and oil prices slashed government revenues and caused major dollar shortages plus intense pressure on local currencies. The fiscal slump has meant governments have not allowed foreign airlines to repatriate their dollar profits in full.

Airlines that are most affected are the ones with air links to African countries.

"Whoever is flying there more, is bleeding more," he said. "Operators will stop operating, these airlines need this money to support their operations."

Aside from Venezuala, Africa has the largest number of countries with blocked airline funds worldwide, according to Mr AlBakri.

In July, Iata's director general Alexandre de Juniac will hold a meeting with Zimbabwe's president to address the issue of unblocking airlines' funds, Mr AlBakri said.