Pakistan’s aviation industry faces potential shutdown for unpaid dues

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The International Air Transport Association (IATA) has warned Pakistan about the potential suspension of foreign airline operations in the country due to unsettled financial obligations. Zafar Paracha, the Secretary of the Currency Exchange Association of Pakistan, has called on the government to prioritize addressing this pressing issue.

IATA has admonished Pakistan for its failure to clear payments in US dollars, emphasizing that persistent barriers to payment settlement may prompt foreign airlines to cease operations in the country. As of January 2023, Pakistan has outstanding debts of approximately $290 million to foreign airlines, second only to Nigeria in terms of unsettled payments.

This precarious situation has led international airlines to contemplate relocating their operations to more financially viable locations. Travel agents responsible for booking tickets and arranging travel plans for Pakistani citizens venturing abroad have voiced their concerns. Should global airlines temporarily suspend their operations in Pakistan, thousands of jobs may be lost, and millions of rupees collected for tickets and other expenses could be forfeited.

Saifullah, a spokesperson for Civil Aviation, declined to provide specific comments on the issue. However, he confirmed that the State Bank of Pakistan has been notified about the situation and the concerns raised by industry stakeholders.

During the coronavirus pandemic, global airlines temporarily suspended their operations for Pakistan, leaving millions of rupees belonging to countless people who had booked tickets and other travel arrangements in limbo for over a year. Travel agents now fear a similar situation if IATA opts to shut down foreign airline operations in Pakistan, whether permanently or temporarily.

Samad Kandhar, owner of the travel agency Delta Air Express, explained that individuals planning to visit other countries often book flight tickets, hotel rooms, taxis, and tickets to specific attractions several months in advance. Should foreign airline operations in Pakistan be suspended, travel plans for millions of people would be disrupted, with advance payments only refundable once airlines resume operations in the country.

Kandhar also shed light on the payment process employed by travel agents when dealing with international airlines and hotels. Agents typically book online in US dollars, subsequently making payments in Pakistani rupees based on the exchange rate at the time of the transaction.


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