The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has warned that the mismanagement of foreign exchange in Pakistan has caused several airlines to shut down operations in the country, and forced many travel agents to do the same.
The blockage of remittances of airline proceeds by the government has been ongoing for the past 10 months, leading to a backlog of payments that has forced some airlines to limit their operations and others to shift their payment processing to overseas offices.
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According to Irfan Iqbal Sheikh, President of FPCCI, the government has blocked the transfer of revenues of international airlines in Pakistan to their respective countries of origin or head office accounts overseas. As a result, all international airlines have tripled their fares for international travel from Pakistan, which has dried up most of the business trips necessary for securing export orders, sourcing raw materials, and promoting trade and B2B activities.
To address the issue, Sheikh proposed a two-pronged strategy to the federal government and the State Bank of Pakistan (SBP): clear the backlog in a structured manner through well-defined installments, and allow airlines to remit their revenues as normal from now onwards to prevent them from shifting their payment collection offices from Pakistan.
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Shabbir Mansha, Vice President of FPCCI, also demanded that the federal aviation minister meet with stakeholders immediately to listen to their issues and help avert a collapse of an important sector of the economy, which could render up to 100,000 workers unemployed.
The Travel Agents Association of Pakistan (TAAP) has also expressed concern about the situation, highlighting that travel agents are forced to shut down their operations due to the double whammy of bad government policies and high-handedness of the airlines. Muhammad Raza, Vice Chairman of TAAP for South Zone, noted that many travel agents have already suffered major job losses, as they are no longer profitable, and the airlines no longer pay commission to them as they previously did.
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In addition to addressing the foreign exchange issue, TAAP delegation also called on the Civil Aviation Authority (CAA) to treat domestic airlines at par with international airlines and facilitate them in meeting their criteria for licensing, route allocation, and regulatory requirements. The delegation argued that the country needs more airlines, airplanes, flights, and travel routes to promote tourism and hospitality industry, national exports, cultural activities, and better integration with the international economic activities.
FPCCI also announced its plan to encourage businessmen to form consortiums and launch new world-class, price-competitive, and capacity-enhancing airlines indigenously, to reduce the reliance on international airlines. Sheikh emphasized that the Pakistani business community needs to be masters of their own destiny and stop looking at international airlines.
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