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IATA: $1.3 Billion in Airline Funds Blocked by Governments

IATA logo (Asharq Al-Awsat) 
IATA logo (Asharq Al-Awsat) 
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IATA: $1.3 Billion in Airline Funds Blocked by Governments

IATA logo (Asharq Al-Awsat) 
IATA logo (Asharq Al-Awsat) 

The International Air Transport Association (IATA) said on Sunday that $1.3 billion in airline funds are blocked from repatriation by governments as of end of April 2025.

“This is a significant amount, although it is an improvement of 25% compared with the $1.7 billion reported for October 2024,” it said in a statement.

The announcement came during the 81st IATA Annual General Meeting (AGM) hosted in New Delhi by one of the largest airlines in India, IndiGo.

At the meeting, airline executives will discuss challenges the sector is facing at the environmental level, in addition to the increased operational costs, driven by factors such as rising fuel prices earlier this year and ongoing disruptions in global supply chains, which have delayed aircraft deliveries and constrained maintenance schedules.

In this regard, IATA urged governments to remove all barriers preventing airlines from the timely repatriation of their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.

“Ensuring the timely repatriation of revenues is vital for airlines to cover dollar-denominated expenses and maintain their operations,” said Willie Walsh, IATA’s Director General.

He said 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. Governments must realize that it is a challenge for airlines to maintain connectivity when revenue repatriation is denied or delayed,” Walsh added.

Sustainable Aviation Fuel (SAF)

IATA said SAF production is expected to grow to two million tons in 2025, accounting for just 0.7% of airline fuel use.

According to Walsh, while the production increase was encouraging, the relatively small amount will add $4.4 billion globally to aviation's fuel bill.

“The pace of progress in ramping up production and gaining efficiencies to reduce costs must accelerate,” Walsh said in a statement.

IATA said SAF is now heading toward Europe, where the EU and UK mandates kicked in on 1 January 2025.

Unacceptably, it added, the cost of SAF to airlines has now doubled in Europe because of compliance fees that SAF producers or suppliers are charging.

For the expected one million tons of SAF that will be purchased to meet the European mandates in 2025, IATA said the expected cost at current market prices is $1.2 billion.

Also, compliance fees are estimated to add an additional $1.7 billion on top of market prices, an amount that could have abated an additional 3.5 million tons of carbon emissions.

“This highlights the problem with the implementation of mandates before there are sufficient market conditions and before safeguards are in place against unreasonable market practices that raise the cost of decarbonization,” said Walsh.

He noted that raising the cost of the energy transition that is already estimated to be a staggering $4.7 trillion should not be the aim or the result of decarbonization policies.

“Europe needs to realize that its approach is not working and find another way,” he said.

New Agreement

In light of the new challenges, IndiGo announced it has entered an agreement with Air France-KLM, Virgin Atlantic and Delta, to expand its long-haul services to North America, Europe and Britain, the airlines said on Sunday.

IndiGo has an extensive domestic network in India, the world's third-largest air passenger market, and is expanding its international reach.

Once the airline partnership is complete, IndiGo will be able to sell flights under its own name on those operated by its partners out of India, and onward travel from Amsterdam and Manchester, UK, on selected flights to Europe and North America.

IndiGo will start flying to Amsterdam and Manchester from July.

Separately IndiGo said it would convert 30 out of 70 options for Airbus A350 jets into firm orders for new planes.

IndiGo is aiming to grow its fleet to 600 aircraft by 2030, from more than 400 currently, and has been leasing aircraft to tide it over aircraft delivery delays and expand internationally.

It recently said it will lease six Boeing 787 wide-body jets from Norse Atlantic Airways by early next year.

US carrier Delta has not flown to India since the pandemic. CEO Ed Bastian told media at an airline summit in New Delhi that Delta will restart direct services from the United States to India over the next couple of years.

“There's not a more important market in aviation at the present time than in India,” Bastian said.

Delta is planning nonstop flights between Atlanta and Delhi, subject to government approval, a joint statement said.

Aviation Safety

At the annual meeting in New Delhi, aviation safety will also be in focus after a spate of air accidents in Kazakhstan, South Korea and North America over the past six months, and rising concerns about air traffic control systems in the United States.

IATA said in February that accidents and incidents related to conflict zones are a top concern for aviation safety requiring urgent global coordination.

In a related development, IATA said India has reached a major milestone in its aviation journey, rising to become the third-largest market for air travel globally.

In return, heightened tensions between India and Pakistan, have significantly impacted air travel in the region, forcing Indian airlines to take longer, detour routes.

Meanwhile, the aviation sector’s recent rebound in passenger numbers has been encouraging, with strong demand emerging across Europe and Asia.

However, US carriers have faced a more complicated picture, experiencing a downturn in travel demand.

The uncertainty over how the Trump Administration’s trade policies will evolve could hold back critical business decisions that drive economic activity, and with it the demand for air cargo and business travel.

 

 

 

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Euro Zone Inflation Surges Past ECB Target on Oil Shock

Shelves filled with fruit inside a supermarket in Berlin (Reuters)
Shelves filled with fruit inside a supermarket in Berlin (Reuters)
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Euro Zone Inflation Surges Past ECB Target on Oil Shock

Shelves filled with fruit inside a supermarket in Berlin (Reuters)
Shelves filled with fruit inside a supermarket in Berlin (Reuters)

Euro zone inflation soared past the European Central Bank's 2% target this month due to surging oil and gas prices, heightening a policy dilemma as expensive energy drags growth and risks generating a self-reinforcing inflation spiral.

Oil prices have nearly doubled as a result of the Iran war and the ECB is now debating whether to raise interest rates to prevent this surge from becoming entrenched in the price of other goods and services, Reuters reported.

Overall inflation in the 21 countries sharing the euro currency jumped to 2.5% in March from 1.9% a month earlier, below expectations for 2.6% in a Reuters poll of economists, as energy costs rose 4.9%.

"The previously price-stable environment is saying goodbye" said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe. "What matters is that this inflationary dirt does not feed through into the core rate." A closely-watched figure on underlying inflation, which excludes volatile ⁠food and energy, ⁠meanwhile, fell to 2.3% from 2.4%, data from Eurostat, the EU's statistics agency showed on Tuesday.

Basic economic theory argues that central banks should look past one-off price shocks generated by supply disruptions, especially because monetary policy works with long lags.

But a quick rise in energy inflation can easily broaden out if companies start building this into selling prices and workers begin demanding higher wages for the loss of disposable income.

High energy prices should increasingly make other goods more expensive and push up core inflation, said Commerzbank's chief economist ⁠Joerg Kraemer, forecasting headline inflation will rise above 3% by May unless the war ends quickly. The public may also start doubting the ECB's resolve if it remains idle, firming the case for rate hikes even in the event of large but not so persistent inflation episodes, ECB President Christine Lagarde said last week.

Financial markets now see three interest rate hikes from the ECB this year, with the first in either April or June.

"The mounting inflation pressure suggests that the ECB will raise its key interest rates in April or, at the latest, in June," Kraemer said. While some policymakers, such as the influential Bundesbank head Joachim Nagel, said that a rate hike as soon as April was an option, others, including ECB board member Isabel Schnabel, have warned against hasty action.

But policymakers agree that the ECB must act if energy starts ⁠generating second round ⁠price pressures, especially since domestic inflation had been above 2% for years.

Services inflation, the single largest item in the consumer price basket and the key gauge for domestic inflation, fell to 3.2% in March from 3.4% a month earlier.

Part of the issue is that the ECB was late in recognizing the inflation problem in 2021/22, arguing for months that the surge was transitory and would pass. It only raised rates when price growth hit 8%, forcing the central bank into its steepest tightening cycle in its history.

But the bloc is now in a very different position, so comparisons with 2022 are not entirely valid.

Rates are already higher, budget policy is tighter, the labor market has been weakening for months and there is no pent-up demand created by pandemic-era lockdowns.

The ECB will next meet on April 30.

"We find it hard to see the ECB moving at the next meeting at the end of April," said Carsten Brzeski, global head of macro at ING. "Unless the ghosts of 2022 are really keeping policymakers awake at night."

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China Expresses 'Gratitude' after 3 Ships Transit Hormuz Strait

FILE - Ships sail through the Arabian Gulf toward the Strait of Hormuz as the sun sets in the United Arab Emirates Monday, March 23, 2026. (AP Photo, File)
FILE - Ships sail through the Arabian Gulf toward the Strait of Hormuz as the sun sets in the United Arab Emirates Monday, March 23, 2026. (AP Photo, File)
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China Expresses 'Gratitude' after 3 Ships Transit Hormuz Strait

FILE - Ships sail through the Arabian Gulf toward the Strait of Hormuz as the sun sets in the United Arab Emirates Monday, March 23, 2026. (AP Photo, File)
FILE - Ships sail through the Arabian Gulf toward the Strait of Hormuz as the sun sets in the United Arab Emirates Monday, March 23, 2026. (AP Photo, File)

Beijing expressed "gratitude" on Tuesday as it said three Chinese ships had transited the crucial Strait of Hormuz, which Iran has all but closed during the war in the Middle East.

"Following coordination with relevant parties, three Chinese vessels recently transited the Strait of Hormuz; we express our gratitude to the relevant parties for the assistance provided," foreign ministry spokeswoman Mao Ning told a regular press conference.

Mao did not offer ‌details about the ‌Chinese ships.

Ship-tracking data showed two Chinese container ships sailed through the Strait of ⁠Hormuz on Monday ⁠on their second attempt to leave the Gulf after turning back on Friday.

The vessels sailed in close formation out of the strait and into open waters, data on the MarineTraffic platform showed.

"Both vessels successfully crossed on a second attempt today, marking the first container vessels to leave the Persian Gulf since the start of the conflict, excluding Iranian flag vessels," said Rebecca Gerdes, data analyst with Kpler, which owns MarineTraffic.

"Both vessels are steaming at an elevated speed toward the Gulf of Oman at the moment."

Officials from China's COSCO, the shipping group that operates ⁠the two vessels, did not respond to requests for comment. COSCO had said in a March 25 client advisory, that it had resumed bookings for general cargo containers for shipments from Asia to the Gulf including the United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Kuwait and Iraq.

Iran has launched attacks on Gulf shipping and threatened more, stranding hundreds of vessels and 20,000 seafarers inside the Gulf.

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UNDP: Arab Countries May Lose Up to $194 Billion from Iran War

FILE PHOTO: A cargo ship in the Gulf, near the Strait of Hormuz, as seen from northern Ras al-Khaimah in United Arab Emirates, March 11, 2026. REUTERS/Stringer/File Photo
FILE PHOTO: A cargo ship in the Gulf, near the Strait of Hormuz, as seen from northern Ras al-Khaimah in United Arab Emirates, March 11, 2026. REUTERS/Stringer/File Photo
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UNDP: Arab Countries May Lose Up to $194 Billion from Iran War

FILE PHOTO: A cargo ship in the Gulf, near the Strait of Hormuz, as seen from northern Ras al-Khaimah in United Arab Emirates, March 11, 2026. REUTERS/Stringer/File Photo
FILE PHOTO: A cargo ship in the Gulf, near the Strait of Hormuz, as seen from northern Ras al-Khaimah in United Arab Emirates, March 11, 2026. REUTERS/Stringer/File Photo

The military escalation in the Middle East, now into its fifth week, may cost economies in the region from 3.7 to 6 percent of their collective Gross Domestic Product (GDP), a staggering loss of $120-194 billion, a new United Nations study found.

“Coupled with an estimated rise in unemployment of up to 4 percentage points or 3.6 million jobs lost—more than the total jobs created in the region in 2025, these reversals will push up to 4 million people into poverty,” according to an analysis by the United Nations Development Programme (UNDP), which was released early Tuesday.

The assessment - “Military Escalation in the Middle East: Economic and Social Implications for the Arab States region” - exposes the concerning reality of structural vulnerabilities characteristic to the region, which enable a short lived military escalation to generate profound and widespread socio economic impacts that may persist over a long-term.

The agency said it had studied a number of different scenarios to determine how the conflict, which began on Feb. 28, might affect countries in the region. The report’s authors indicated that the damage could be profound, even if the war ends relatively soon.

“A short-lived military escalation in the Middle East could generate profound and widespread socio-economic impacts across the Arab States region,” they said.

“Since the escalation began, maritime security risks and attacks on tankers have sharply curtailed shipping activity through the Strait of Hormuz,” said the study.

The Strait remains the world’s most critical maritime energy chokepoint, it added.

It warned that even limited military escalation or accidental incidents affecting the Strait can rapidly destabilize global energy markets and trigger sharp price movements.

The study added that simulations suggest that the military escalation could generate substantial but uneven macroeconomic impacts across the Arab States region.

Simulations indicate the Gulf Cooperation Council countries would experience macroeconomic impacts. GDP is projected to decline between 5.2 percent under the moderate disruption scenario and 8.5 percent under the most severe scenario.

The Levant region (Iraq, Lebanon, Jordan and Syria) could experience significant macroeconomic losses across all scenarios. Compared to the No-War scenario GDP is projected to decline between 5.2 percent and 8.7 percent.

These translate into between approximately 2.8 and 3.3 million additional people pushed into poverty.

The Human Development Index (HDI) declines by approximately –0.2 to –0.4 percent, corresponding to a loss of roughly half a year to nearly one year of human development progress. These impacts are most pronounced in the Levant, where losses translate into setbacks of around one to one and a half years.

According to the study, the war could also have significant implications for the region’s monetary, fiscal and financial conditions.

“The region’s central banks may therefore need to raise interest rates and intervene in foreign currency markets to contain foreign exchange and inflationary pressures and to provide liquidity support to banks,” it said.