Carriers face significant repatriation problems in five countries.
DUBLIN – The International Air Transport Association (IATA) called on governments to respect international agreements obliging them to ensure airlines are able to repatriate their revenues.
"Air connectivity is vital to all economies. The airline industry is a competitive business operating on thin margins. So the efficient repatriation of revenues is critical for airlines to be able to play their role as a catalyst for economic activity. It is not reasonable to expect airlines to invest and operate in nations where they cannot efficiently collect payment for their services," said Tony Tyler, IATA’s Director General and CEO.
Venezuela and Nigeria
IATA monitors blocked funds globally, the sum of which exceeds $5 billion. The top two countries blocking the repatriation of airline funds are Venezuela and Nigeria.
Venezuela: Airline funds blocked from repatriation in Venezuela total $3.8 billion. Currency controls implemented in 2003 necessitate government approval to repatriate funds. By 2013, approvals were not keeping pace with the amount of funds requiring repatriation and significant airline revenue accumulated in Venezuela. The situation became critical in 2015 when only one request to repatriate funds was approved. So far in 2016 only one request to repatriate funds has been granted.
Nigeria: Total airline funds blocked from repatriation in Nigeria are nearing $600 million. Repatriation issues arose in the second half of 2015 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations. Nigerian authorities are engaged with the airlines and are, together with the industry, seeking possible measures to make the funds available.
"Blocked funds are a problem in a diverse group of countries, some of them undergoing significant economic challenges particularly with a fall-off in oil revenues. But one thing all five nations have in common is the urgent need for robust air connectivity that is being hampered by airlines’ difficulty in repatriating funds. Strong connectivity is an economic enabler and generates considerable economic and social benefits–something that struggling economies need more than ever. It is in everybody’s interest to ensure that airlines are paid on-time, at fair exchange rates and in full," Tyler said.
Top Five Country’s Blocking Repatriation of Airline Funds
|
Country |
Amount US$ Million |
Months Held |
|
Venezuela |
3,780 |
16 |
|
Nigeria |
591 |
7 |
|
Sudan |
360 |
4 |
|
Egypt |
291 |
4 |
|
Angola |
237 |
7 |
Airlines Reaffirm Sustainability Commitments
Also, IATA's 72nd Annual General Meeting (AGM) overwhelmingly approved a resolution urging governments to adopt a single global carbon offset mechanism to address carbon emissions from international aviation at the 39th Assembly of the International Civil Aviation Organization (ICAO) later this year.
"Airlines are committed to sustainability. With improvements to technology, operations and infrastructure and the deployment of sustainable alternative fuels, we are delivering results against our climate change commitments. However, to achieve carbon-neutral growth from 2020, we also need a mandatory global carbon offset scheme," said Tony Tyler, IATA’s Director General and CEO.
In encouraging the adoption of a global carbon offset mechanism, the resolution endorses current aviation industry measures to manage its carbon footprint as part of global efforts to address climate change and safeguard sustainable development and calls on governments to:
- Consider 11 recommended design elements for the mechanism that would ensure environmental integrity and simplify implementation while avoiding market distortions
- Ensure that existing economic measures (including taxes) on a national and regional basis to manage the industry’s climate change impact become redundant and that no new measures are introduced
Under the leadership of ICAO, governments are considering a proposal for a Carbon Offset and Reduction Scheme for International Aviation (CORSIA) in preparation for the ICAO Assembly.
"The details of CORSIA are still being worked out. But as an industry we have a clear focus on what is needed. We want a cost-effective measure that leads to real and permanent carbon reductions. That mechanism should be simple, mandatory and applied on a global basis, avoiding the cost and complexity that a patchwork of uncoordinated measures would create. It must not lead to competitive or market distortions. And we can accept some flexibility in implementation, including the potential for a phasing-in of countries over time, if that is needed by governments to recognize the different levels of maturity of aviation markets," said Tyler.
Aviation was the first industry sector to set carbon-reduction targets at the global level. These are: improving fuel efficiency by 1.5% annually to 2020, capping net emissions with carbon- neutral growth by 2020, and cutting emissions in half by 2050 compared to 2005. The industry was also the first to agree on a global four-pillar strategy to reduce carbon emissions. Pillars one, two and three focus on new technology (especially new fuel-efficient aircraft and sustainable alternative fuels), operational efficiency improvements to cut emissions, and investment in better infrastructure, particularly reformed and modernized air traffic management. The fourth pillar – implementation of a global market-based measure – would be covered by the CORSIA.
This resolution follows an historic resolution of the 69th IATA Annual General Meeting in 2013 in which the industry strategy to achieve Carbon-Neutral Growth was agreed.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
