Pakistan’s aviation industry is facing a crisis as airlines struggle to recover their dues from the cash-strapped country. According to a report by the Financial Times, the International Air Transport Association (IATA) has stated that it has become “very challenging” for airlines to serve Pakistan as they struggle to repatriate $290 million in dues, which are paid in dollars. This is especially troubling given that Pakistan’s foreign exchange reserves currently stand at just $4.3 billion.
The Pakistan Civil Aviation Authority (PCAA) has said it is trying to pay the airlines on time and has been in contact with relevant authorities over the issue. However, the IATA has reported that $290 million was stuck in Pakistan as of January, up by almost a third since December. Pakistan had blocked $225 million it owed to international airlines in December 2022.
“Airlines are facing long delays before they are able to repatriate their funds,” said IATA Asia-Pacific head Philip Goh. “Some airlines still have funds stuck in Pakistan from sales in 2022,” he added. If the unstable economic situation persists, many airlines may decide to utilize their aircraft “elsewhere.”
Last month, Virgin Atlantic announced the suspension of its operations in Pakistan. While the airline cited the decision as part of its plan to revamp operations, analysts believe that unstable economic conditions spurred the company to shut shop. Citing data from an aviation analytics company, the FT report stated that fewer total flights were scheduled for March 2023 than the same month in 2019.
In conclusion, Pakistan’s aviation industry is facing a bleak situation as airlines struggle to recover their dues. The situation is especially concerning given Pakistan’s fast-depleting foreign exchange reserves. The PCAA must work promptly to resolve this issue and ensure that international airlines are able to serve Pakistan without undue financial burden. Otherwise, the country may face the loss of vital transportation links and further economic hardship.
