It seems until the International Monetary Fund (IMF) deal is struck, Pakistan will remain embroiled in multiple crises. Be it food items or petrol or the simplest of necessities, a common man wakes up to a new crisis every day. The latest crisis that is stalking the country appears to be aviation. According to the Financial Times, Pakistan is heading towards an ‘aviation crisis’ as airlines are finding it difficult to recover $290 million from the government.
Quoting the International Air Transport Association (IATA), the newspaper said it had become “very challenging” for airlines to serve Pakistan until their pending dues are cleared.
IATA, which represents around 300 airlines, said Pakistan owed $290 million as of January.
IATA’s Asia-Pacific head Philip Goh, said: “Some airlines still have funds stuck in Pakistan from sales in 2022.”
He went on to say that if this situation persists, the airlines would prefer to put their aircraft assets to better use elsewhere. The Civil Aviation Authority (CAA), on the other hand, has said it was trying to pay the airlines on time. CAA Director General Khaqan Murtaza agreed that airlines were facing delays in repatriating their payments and that the finance minister and the State Bank of Pakistan were being contacted for timely payments to the airlines. IATA had said that in December 2022, Islamabad would block the $225 million it owed to international airlines.
Recently, the issue of international airline routes being cut due to non-remittance of ticket sales in foreign currency reached the Senate Standing Committee on Aviation, which decided to recommend the aviation ministry meet all airline heads and persuade them to resume regular operations.
A major international airline, Virgin Atlantic, suspended its operations in Pakistan.
Though it linked the decision to its plan to revamp operations, in reality, it was more due to the economics of the route. The Financial Times, quoting data from an aviation analytics company Cirium, said foreign airlines were reluctant to return to Pakistan, with fewer flights scheduled for March 2023.
The country is in a precarious situation. Nothing seems to be clear at the moment. The entire economics of the country rests on the release of the IMF tranche which would further unlock funds from friendly countries and other lenders. The IMF is taking all the time in the world. Though there has been a slight improvement in the reserves, it is not what the country can survive on.
These few days are critical. Until the deal with the IMF does not go ahead, the country cannot move any further, and one after the other a new crisis would be knocking at its door.