IATA urges Pakistan to immediately release $399m airline funds

April 26, 2024 (MLN): The International Air Transport Association (IATA) has called on Pakistan to immediately release airline revenues, worth $399 million, that are being held in contravention of international agreements.

“The situation has become severe with airlines unable to repatriate over $720m ($399m in Pakistan and $323m in Bangladesh) of revenues earned in these markets,” read the statement issued by IATA.

“The timely repatriation of revenues to their home countries is critical for payment of dollar denominated expenses such as lease agreements, spare parts, overflight fees, and fuel," said Philip Goh, IATA’s Regional Vice President for Asia-Pacific.

Delaying repatriation contravenes international obligations written into bilateral agreements and increases exchange rate risks for airlines, he said.

"Pakistan and Bangladesh must release the more than $720m that they are blocking with immediate effect so that airlines can continue to efficiently provide the air connectivity on which both these economies rely,” Goh stressed.

IATA is the trade association for the world’s airlines, representing some 320 airlines or 83% of total air traffic.

It noted that foreign airlines operating in Pakistan face an onerous process when applying for currency repatriation.

Airlines are required to provide an auditor's certificate with each remittance showing the amount to be remitted.

This can happen as frequently as twice a month, which can be time consuming and adds to the operating cost in Pakistan.

Airlines are also required to obtain a Tax Exemption Certificate from the Commissioner of Income Tax.

The certificate is redundant since airlines operating to Pakistan are covered by avoidance of double taxation.

"This further prolongs the fund repatriation process. We urge the government to simplify this process," the association said.

Prior to COVID-19, Pakistan’s aviation sector supported around 425,000 jobs and $2.8 billion in economic activity.

Passenger numbers recovered to pre-COVID levels in 2023, and are expected to grow by more than 2.5 times by 2040, it said.

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