Foreign airlines have $323m stuck in Bangladesh: IATA

The timely repatriation of revenues to their home countries is critical for payment of dollar denominated expenses, according to IATA

The foreign airlines operating flights to and from Bangladesh have their $323 million blocked in the country, the International Air Transport Association or IATA has said.

In a statement dated Tuesday, IATA also called on Bangladesh and Pakistan to immediately release airline revenues that are being held in contravention of international agreements.

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

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, according to IATA.

“Delaying repatriation contravenes international obligations written into bilateral agreements and increases exchange rate risks for airlines,” said Philip Goh, IATA’s regional vice-president for Asia-Pacific.

The statement said Pakistan should simplify the onerous process for repatriation. This includes the requirement to provide audit certificates and a tax exemption certificate, both of which cause unnecessary delays.

Bangladesh has more standardised processes, but aviation needs a higher priority from the central bank to facilitate access to foreign exchange, it added.

“We recognise that governments have a difficult challenge in how foreign currencies are used strategically,” said Goh.

“Airlines operate on razor-thin margins. They need to prioritise the markets they serve based on the confidence they have in being able to pay their expenses with revenues that are remitted in a timely and efficient fashion.

“Reduced air connectivity limits the potential for economic growth, foreign investment, and exports. With such large sums of money involved in both markets, urgent solutions are needed,” he added.

Aviation expert Kazi Wahidul Islam said the travel agencies are supposed to send the share of profits from ticket sales to the airlines every month on approval from the Bangladesh Bank.

But a lack of central bank approval because of a dollar crisis prevented the agencies from sending the money in a timely manner for the past few years, leading to the huge due bills, he said.

“To cut the impact of this delay, the airlines have increased ticket prices for the Bangladesh routes. People are alleging that ticket prices on these routes are higher than others.

“Basically, the airlines are increasing the prices to cover the losses, so that the fluctuation in dollar prices can be consistent with the due bills,” Wahidul explained.