IATA AGM: Al-Awadhi warns Africa’s blocked funds at crisis point

The escalation of the withholding of funds by African countries to airlines is reaching a critical point warned Kamil Alawadhi IATA’s Vice President, Africa and the Middle East, speaking at the Association’s annual general meeting today. 

Kamil Al-Awadhi speaking at today's IATA briefing (Image: Aerocomm)

Some 80% of the funds – repayment for tickets bought in local currencies but withheld by nations claiming unavailable foreign currency – are from countries in the MEA region.

Nigeria and Algeria alone are responsible for more than $1 billion of debt – leading to some airlines, including Emirates, to ban flights to Nigeria.

Globally the situation has worsened in the past year with blocked funds rising by 47% in the past year to $2.27billion.

“Every penny counts for the airline industry, by failing to pay their bills for air transport these governments are putting industry in a tighter position, said Al-Awadhi

The impact for these governments is also high, he said. “Airlines pulling out reduces connectivity, leads to higher ticket prices, affects confidence from foreign investors  and leads to the collapse of the domestic travel agency businesses.”

Another of the major defaulter is Ethiopia with $130 million owed

“Ironically, the biggest airline in Africa that could be impacted in Africa is Ethiopian Airlines,” Al-Awadhi said.”The government needs to rethink its position on this issue. Ethiopian Airlines contributes more than 20% of the country’s GDP. Does the government want to impact its 20 now by withholding $130m? I think it should settle the bill really quickly.”

One of the biggest challenges is frequent changes in government and officials. “We build up relationships and get the message across. Then we see the governors of the central banks replaced and then have to start all over again.”