Middle East passenger numbers 'will double to hit 530 million in 2043', IATA official says

Dubai: Middle East passenger numbers are expected to double and hit 530 million in 2043, an International Air Transport Association (IATA) official told media on Sunday ahead of its annual general meeting (AGM) in Dubai.

According to Kamil Al Awadi, IATA's Regional VP for Africa and the Middle East, passenger traffic is expected to grow at an average annual rate of 3.9 per cent from 2023 to 2043.

Moreover, the IATA official also said that the passenger traffic of Middle Eastern carriers has fully recovered post-pandemic.

“There is also an improvement in cargo performance, with a 6.4 per cent increase as of April 2024. The Revenue Passenger Kilometres (RPK - a way of calculating the number of kilometres travelled by paying customers) show a slight increase of 0.5 per cent from the 2019 numbers,” Al Awadi explained. Al Awadi said that Middle East Cargo Tonne Kilometers currently stand 6.4 per cent above 2019 levels.

Middle Eastern airlines saw a 14.2 per cent year-on-year increase in demand. Capacity increased 9.9 per cent year-on-year, and the load factor increased +3.0 percentage points to 79.3 per cent compared to April 2023, according to IATA’s monthly passenger traffic reports.

Middle East airlines soared, reporting a 33.3 per cent uptick in air traffic in 2023 compared with the previous year, according to the aviation body. Data revealed that capacity in the region also increased by 26 per cent year-on-year, with passenger load factor climbing 4.4 percentage points to 80.1 per cent.

Al Awadi's comments come ahead of IATA’s AGM and the World Air Transport Summit (WATS), which are scheduled for June 2-4 in Dubai.

This is the first time the event is being held in the UAE, and Dubai’s flagship carrier, Emirates, is the host airline. Over 1,500 participants, including industry leaders and government officials, are expected to attend. WATS follows the AGM for a comprehensive program addressing aviation's critical issues, including supply chain challenges, labour supply shortages, and geopolitical issues leading to capacity constraints.

Blocked funds

Regarding blocked funds, IATA reported a 28 per cent decrease in airline funds blocked from repatriation by governments. The total blocked funds at the end of April stood at approximately $1.8 billion, a reduction of $708 million (28 per cent) since December 2023. Al Awadi said, “One significant issue is blocked funds, which currently amount to $1.8 billion globally. This figure is about $1.1 billion for Africa and the Middle East, with roughly $900 million attributed to Africa.”

He said, “Countries like Algeria, Ethiopia, and Lebanon are among those with significant blocked funds. This issue is critical as airlines are often cash-strapped, and blocked funds can severely impact their operations.”

IATA reiterated the call for governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities by international agreements and treaty obligations.

"The reduction in blocked funds is a positive development. However, the remaining $1.8 billion is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements. Even more importantly, it is a pre-requisite for airlines—who operate on thin margins—to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues,” said Willie Walsh, IATA’s Director General.

‘Countries must release funds’

Walsh explained that eight countries account for 87 per cent of the total blocked funds, amounting to $1.6 billion.

The situation has become severe in Pakistan and Bangladesh, with airlines unable to repatriate $731 million ($411 million in Pakistan and $320 million in Bangladesh) of revenues earned in these markets.

"Pakistan and Bangladesh must release the $731 million in blocked funds immediately to ensure airlines can continue providing essential air connectivity. In Bangladesh, the solution is in the hands of the Central Bank, which must prioritise aviation’s access to foreign exchange in line with international treaty obligations. The solution in Pakistan is finding efficient alternatives to the system of audit and tax exemption certificates, which cause long processing delays," said Walsh.

Al Awadi said, “Another priority is harmonising regulations, taxes, and charges. The region has seen a recent trend of states recalculating and increasing taxes and charges, often without proper economic regulations and consultation with the industry.” He said successful engagements in countries like Saudi Arabia, Egypt, and South Africa have shown that proactive collaboration can lead to positive outcomes.