Foreign currency block sees airlines cut Bangladesh services

Leading garment manufacturer, Bangladesh, has withheld over USD $200 million of airline funds for repatriation, reportedly using the funds to shore up its depleted treasuries, leading foreign airlines to scale back their services and discouraging new market entrants.

The International Air Transport Association warned last month that the amount of airline funds for repatriation being blocked by governments has risen by over 25% in the last six months to USD $2 billion. 

Over 27 countries and territories are blocking funds from repatriation, the IATA said, with Nigeria topping, followed by Pakistan and Bangladesh coming in third position.

By the middle of 2022, Bangladesh’s Hazrat Shahjalal International Airport, in the capital Dhaka, was operating 140 international flights daily, on average.

Turkish Airlines usually operates 14 flights weekly in Bangladesh, but has been operating only seven flights a week since November as it cannot remit around USD $24 million and most other foreign airlines including Malindo Air, Kuwait Airways, and Cathay Pacific face the same issue and have slashed their flight frequencies to and from Bangladesh.

Fund repatriation by foreign airlines operating in Bangladesh has remained suspended since March 2022, with IATA calling on governments to remove barriers to airlines repatriating their revenues, in line with international agreements and treaty obligations.

Moreover, carriers are having to pay for refuelling their aircraft in Bangladesh by bringing in dollars through inward remittances, having been asked to pay it in dollars several years ago.

The country’s tourist trade body has predicted that the number of flights by foreign airlines from Bangladesh may decrease by 60% in the next six months to one year.

Around 80-90 international flights currently operate from Dhaka airport each day, equivalent to a 40% drop on last year.

Willie Walsh, Director General of IATA said, “No business can sustain providing service if they cannot get paid and this is no different for airlines…and it is critical for any economy to remain globally connected to markets and supply chains.”   
 
IATA continues to monitor the situation very closely and is engaging with the Bank of Bangladesh. It urged the countries’ governments to quickly release all outstanding funds of the airlines to avoid disruptions in the smooth flow of passengers and goods into their economies.

There will be more to feature and share on this subject over 2023 and we will continue to keep you updated with the latest development in any country that you are trading with globally. Unfortunately the situation is not unique to Bangladesh in relation to economies running out of foreign exchange and the impact is likely to increase globally with fallout across the supply chain, regardless of the mode.

Despite the challenges, we continue to get our customers’ shipments lifted from Bangladesh. We work closely with our local partners to monitor the situation, market capacity and new service opportunities that might benefit our customers, such as placing shipments through alternative gateway airports in India or Singapore with a land-bridge or ocean first leg connection.

Evaluating and booking space on viable services early, including cross-modal and cross-border solutions, is a critical factor in achieving our customers’ deadlines. 

EMAIL Elliot Carlie to review our time-sensitive solutions for your Bangladesh and Asia shipments.