The Writer
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. 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.
Blocked funds are revenues earned by international airlines in local currencies that cannot be repatriated in US dollars due to government-imposed restrictions or foreign exchange shortages. Why does this happen?
Airlines have a unique business structure. They earn revenue in many countries, but most of their major costs—aircraft, maintenance, and people—are centralized at their home base and are 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. That ensures airlines can pay their bills and keep operations running safely and reliably.
But countries do not always abide by what they have agreed. Sometimes they place restrictions on currency leaving their borders or limit access to foreign exchange. That puts airlines in a very difficult position: it’s hard to sustain operations if you can’t use the revenues you’ve earned to pay the bills.
As of October 2025, airlines had a staggering USD $1.2 billion in blocked funds globally. Timely repatriation in US dollars is essential for airlines to meet dollar-denominated expenses like leasing, fuel, maintenance, and salaries.
Beyond the immediate cash flow impact, these restrictions carry hidden costs that compound the problem.
Connectivity Risk Premium
When funds remain trapped, airlines are exposed to currency depreciation. If a local currency loses 20% of its value during the delay, the airline suffers a direct financial loss when converting back to dollars. At the same time, carriers often borrow to cover operational expenses while waiting for blocked funds to be released, and rising interest rates can add hundreds of thousands in unplanned costs. Or there could be opportunity cost: capital tied up in blocked funds cannot be invested in fleet upgrades, route expansion, or sustainability initiatives, slowing growth and competitiveness.
This is what we can call the ‘connectivity risk premium’. Airlines must factor this risk into their network and financial planning, which often leads to reduced flight frequencies, higher fares, or even the suspension of routes altogether. In effect, blocked funds make a country more expensive and less attractive to serve.
Nigeria is a case in point. At one stage, blocked funds hit $850 million. Economy tickets soared into the thousands of dollars, limiting access both to and from Nigeria. Some airlines suspended flights to Nigeria while others reduced frequencies or restricted ticket sales.
Economic Trade-Offs
For countries with limited foreign exchange, deciding how to allocate hard currency is a tough economic policy choice. Every dollar matters. Should reserves go toward importing fuel and medicine—essentials for daily life—or toward clearing blocked airline funds to maintain vital connectivity, tourism, and trade? These are not easy decisions. Yet blocking airline funds comes at a steep price. Over time, these restrictions ripple through the economy, affecting jobs, investment, and growth.
The longer funds remain trapped, the greater the damage to confidence. International airlines and investors see blocked funds as a warning sign of financial instability. Currency controls, while sometimes necessary during crises, can tarnish a country’s reputation and strain relationships with global institutions, making recovery harder and slower.
Protecting hard currency may offer short-term relief, but the long-term costs—lost competitiveness, weakened investor trust, and strained diplomacy—often outweigh the immediate gains.
It is worth remembering that aviation is not just about moving people from point A to point B. It is a powerful economic engine. It connects markets, drives trade and tourism, and supports millions of jobs worldwide. Every dollar spent on air transport multiplies across the economy. In 2023, aviation supported 86.5 million jobs globally and contributed USD 4.1 trillion to GDP—3.9% of the world’s total. It also carried 33% of global trade by value, moving goods worth USD 8 trillion.
Resolving the Blocked Funds Conundrum
The good news is that solutions exist. With political will, open dialogue, and a commitment to transparency, governments can resolve blocked fund challenges in ways that support economic and aviation growth.
Prioritising aviation in foreign exchange allocation is the first step toward clearing blocked funds. From there, authorities can streamline administrative processes and eliminate unnecessary bureaucratic hurdles that slow repatriation. Enforcing the provisions of bilateral air service agreements within regulatory frameworks is equally critical to remove ambiguity and ensure compliance.
Alongside advocacy for full clearance of blocked funds, we also help airlines manage short-term pressures. This includes negotiating with commercial banks for competitive foreign exchange rates and identifying opportunities to use local currency for local expenses—such as airport fees, air traffic control charges, ground handling, and catering.
Experience shows that with the right approach, blocked funds can be released without destabilising local economies. Nigeria offers a clear example: through constructive engagement and phased repatriation, the backlog was successfully cleared.
IATA continues to work closely with governments, central banks, and airline partners to resolve currency repatriation challenges on behalf of our members. Our message is simple: unblocking funds is not just about improving cash flow. It is about safeguarding connectivity, protecting livelihoods, and unlocking economic potential. Together, we can ensure aviation continues to deliver prosperity for all.
By Thomas Reynaert, IATA Senior Vice President, External Affairs
