Trapped Capital: The $1.3Bn Threat to Airline Connectivity

As of April 2025, a staggering $1.3bn in airline revenues remain trapped across a handful of countries—funds that airlines have earned through the sale of tickets and services but are unable to repatriate due to government-imposed restrictions. 

While the figure represents an encouraging 25% drop from the $1.7bn recorded in October 2024, the problem remains a critical and recurring threat to global aviation — one that IATA bluntly describes as a violation of international agreements and a direct risk to the sustainability of air connectivity.

This is not simply a financial dispute. It is a geopolitical and operational flashpoint, and one that lays bare the precarious balance between state sovereignty and the commercial foundations of international air transport.

For an industry that routinely operates on net margins below 5%, having significant revenue trapped in foreign jurisdictions can be the difference between survival and suspension of service. 

Dollar-denominated costs—fuel, leases, overflight charges, maintenance, crew allowances—don’t wait for currency controls or regulatory leniency. 

When governments delay or deny the repatriation of airline funds, they are, in effect, imposing a stealth tax on foreign carriers and jeopardising their local operations.

Willie Walsh, IATA’s Director General, didn’t sugar-coat the matter: “Delays and denials violate bilateral agreements and increase exchange rate risks. Reliable access to revenues is critical for any business — particularly airlines which operate on very thin margins. Economies and jobs rely on international connectivity.”

This is the crux. An airline’s decision to serve a market is inherently commercial. But when commercial certainty is removed — when earnings become inaccessible — connectivity is called into question. And that has consequences far beyond the terminal gates.

Today, just ten countries are responsible for 80% of the world’s blocked airline funds. Top of the list is Mozambique, now withholding $205mn, overtaking Algeria, Lebanon, and the Central African franc zone, whose six-nation bloc (Cameroon, Chad, CAR, Gabon, Republic of Congo, Equatorial Guinea) accounts for $191mn. Together, these jurisdictions have become case studies in how macroeconomic fragility and policy choices collide with the fundamentals of international aviation.

Algeria’s $178mn block and Lebanon’s $142mn are especially problematic given the political volatility in both nations. 

In Lebanon, hyperinflation and political gridlock have made it virtually impossible for foreign airlines to repatriate earnings, even as demand for outbound travel remains strong. 

The discrepancy between local market strength and fiscal paralysis is something airlines must now model for with increasing regularity.

Bangladesh and Pakistan, long cited by carriers as among the most difficult environments for currency repatriation, have made meaningful progress. 

Both nations had been among the top five most restrictive jurisdictions, but recent improvements have reduced blocked airline funds from $196mn to $92mn in Bangladesh, and from $311mn to $83mn in Pakistan.

 These gains have come amid rising pressure from aviation stakeholders, diplomatic interventions, and targeted bilateral discussions. 

Even so, the amounts remain significant and highlight the lingering friction between government liquidity crises and the mechanics of global aviation.

Eritrea ($76mn), Zimbabwe ($6mn), and Ethiopia ($44mn) round out the list, all located in sub-Saharan Africa, a region which now accounts for 85% of all blocked funds globally.

This issue is not abstract. Airlines are responding with network reductions, capacity constraints, and in some cases, outright suspensions of service.

In Nigeria — whose historical precedence on blocked funds has set off alarm bells for years — Emirates made headlines in 2022 when it suspended flights to Lagos due to an inability to repatriate over $85mn in earnings. 

Though not currently on the top-ten list, Nigeria remains a cautionary tale. Emirates’ high-profile withdrawal triggered broader re-evaluations of financial exposure across West Africa, where currency volatility and economic protectionism are not uncommon.

Other carriers, including British Airways and Turkish Airlines, have reduced frequencies or capped sales in local currencies in markets where repatriation risks are high.

 Several airline executives, speaking privately, say the practice of “cash forecasting by country” is now a standard internal protocol, with route viability reassessed not just by load factor and yield—but by fund mobility.

Some markets now carry implicit financial risk premiums. 

A route that appears profitable on paper may in fact generate unusable income. The result is distortion. Airlines must either increase fares to hedge against blocked funds or reduce exposure altogether — penalising consumers and undercutting the very connectivity governments claim to prioritise.

Air service agreements between countries are governed by bilateral treaties, many of which include explicit clauses guaranteeing the unrestricted repatriation of funds.

 These agreements are not merely diplomatic formalities — they are the legal scaffolding that underpins the international aviation system.

When countries unilaterally restrict access to airline earnings, they are, in effect, breaching treaty obligations. IATA and several member airlines have begun to increase legal pressure, and while few cases have made it to formal arbitration, the trend is concerning.

The problem is compounded by the IMF and World Bank’s limited ability — or willingness — to intercede. Currency shortages, often cited as the rationale for restrictions, are symptoms of broader structural issues in local economies. Governments facing debt crises or dwindling foreign reserves often see airline funds as a politically low-cost form of capital control.

But these are short-term fixes with long-term damage. When confidence erodes, so too does investment and service continuity.

There is, however, one bright spot. Bolivia, which held $42mn in blocked funds as recently as October 2024, has fully cleared its backlog. 

The move has been welcomed across the industry and serves as a proof of concept: with political will and central bank co-ordination, solutions are possible.

Industry observers suggest Bolivia’s progress followed intensive engagement between aviation authorities, foreign airlines, and multilateral institutions.

 The clearance of funds was seen not just as a financial settlement, but as a statement of intent to restore credibility with international partners. Airlines have since confirmed plans to increase services to Santa Cruz and La Paz — early evidence that liquidity restoration leads directly to capacity growth.

The Africa and Middle East (AME) region now accounts for $1.1bn of the $1.3bn global total.

 While some of this can be attributed to persistent structural currency challenges, it also reflects the growing demand for air travel in economies that lack the regulatory maturity of more developed markets.

Middle Eastern carriers, especially those with pan-African networks, have begun ringfencing their operations — adjusting pricing and revenue management systems to reduce reliance on trapped cash. Some have imposed hard limits on local currency ticketing. 

Others are favouring interline and codeshare agreements that allow revenue to be collected outside the blocked jurisdictions.

And while Africa’s aviation potential remains vast — untapped demographics, economic development, and geographic necessity — airlines need financial certainty to commit. 

The growth of new carriers like Nigeria Air, or the expansion of existing ones such as Ethiopian Airlines, cannot be fully realised in an environment of unpredictable revenue recovery.

It is not just airlines that suffer. When connectivity drops, the broader economy pays the price. 

Tourism collapses, trade slows, investment dries up. A recent IATA study found that for every 10% increase in air connectivity, a country's GDP can grow by 0.5%. 

Conversely, when airlines reduce or suspend service due to financial restrictions, those economic multipliers are lost.

This is especially harmful for landlocked or isolated nations, where aviation is not a luxury — it’s a lifeline. The same economies imposing barriers to repatriation are often those that stand to gain the most from open skies and liberalised access to capital.

IATA has been clear: Governments must act. The call is for full alignment with international agreements, transparency in currency controls, and coordinated action between finance ministries and civil aviation authorities.

For their part, airlines are demanding predictability. In uncertain markets, predictability can be more valuable than profitability. 

As network planning cycles for 2025–2026 intensify, decisions about which cities to serve, what frequencies to fly, and what capacity to deploy will be shaped not just by passenger demand — but by access to the money that demand generates.

In a year where geopolitical risk, oil prices, and supply chain disruptions continue to challenge the airline business model, governments withholding airline funds are adding another layer of avoidable pressure to an already strained global system.

Trapped capital is more than a financial inconvenience — it is a destabilising force that undermines the viability of international aviation. With $1.3bn still locked in jurisdictions that rely heavily on-air connectivity, the message to governments should be unambiguous: Respect international obligations, release the funds, and restore trust. Without the free movement of capital, there can be no free movement of people.