Airlines face pressure from trapped ticket revenues

The International Air Transport Association has said that international airlines are facing growing financial pressure as billions of dollars in ticket revenue remain trapped in various countries due to foreign-exchange restrictions.

In an article by the Senior Vice President, External Affairs at IATA, Thomas Reynaert, he warned that the issue of blocked funds poses a serious risk to global air connectivity and economic growth.

“Imagine running a business where you sell your products in certain markets, but access to your revenue was not guaranteed. Would you keep operating there? For many airlines, this isn’t hypothetical; it’s a reality,” Reynaert said.

He explained that blocked funds refer to revenues earned by international airlines in local currencies that cannot be repatriated into US dollars due to government-imposed restrictions or foreign exchange shortages.

“Despite selling tickets and providing services, millions of dollars in airline revenue remain trapped in countries for extended periods of time. In aviation, this problem is known as blocked funds, and it’s a serious threat to global connectivity and economic growth,” he said.

Reynaert noted that while airlines earn revenues across multiple countries, their major expenses, such as aircraft, maintenance, and personnel costs, are largely centralised at their home bases and paid in US dollars.

“To make this system work, when countries sign air services agreements, they also agree that airlines should be able to repatriate the funds earned from sales in those countries back to their base,” he said, adding that this allows airlines to pay their bills and maintain safe and reliable operations.

However, he said some countries fail to honour these agreements by restricting access to foreign exchange or limiting currency outflows, creating operational challenges for airlines.