Zimbabwe owes airlines US$196 million, IATA warns ED over debt

Zimbabwe Emirates
Emirates on its maiden flight to Zimbabwe in 2012. The airline is one of many owed by Zimbabwe

Zimbabwe owes US$196 million to the world’s airlines in unremitted ticket sales, and the International Air Transport Association (IATA) has warned President Emmerson Mnangagwa that the debt could force operators to reduce flights into the country.  

Alexandre du Juniac, director-general of IATA, which represents some 300 airlines, met Mnangagwa in Harare on Tuesday and told him that Zimbabwe’s trade and tourism were at risk over the debt.

“Aviation is a key contributor to the prosperity of this country.  But funds from the sale of air tickets in Zimbabwe cannot currently be repatriated to airlines.  It will be negative for business, trade and tourism if airlines are forced to reduce their service to Zimbabwe,” said du Juniac.

“But it was clear from our fruitful meeting that we are united in our commitment to finding an appropriate solution that will address this and support Zimbabwe’s economic development.”

Zimbabwe’s forex crisis has seen airlines unable to repatriate their earnings from the country. In May, Orhan Abbas, senior vice-president of commercial operations in Africa for Emirates, named Zimbabwe as one of several African markets where currency troubles have hurt operations. The airline was in talks with governments of both Zimbabwe and Ethiopia, about getting the money it is owed, according to Gulf News.

After Tuesday’s IATA meeting with Mnangagwa, further meetings have been scheduled to work out a payment plan prevent the accumulation of further debt, IATA said.

To prevent further arrears, the Ministry of Finance, under its recent notice banning the usage of foreign currency for local transactions, allowed airlines to continue charging for airfares in forex. Previously, Zimbabwe had been virtually subsidising air travel by allocating hard currency for airfares bought in local currency.

[Robbing Peter to fly Paul: Click to read how Zimbabwe subsidised air travel at economy’s expense]

Zimbabwe is the biggest culprit of several African countries that owe international airlines. In total, according to IATA, US$413 million is owed to airlines by African countries. Other African countries withholding significant funds are Ethiopia, Sudan, Algeria, Angola and Eritrea.

Partly due to unremitted earnings, Africa has become an expensive place to do business for airlines. While the world’s airlines on average make US$7.80 of profit per passenger, African airlines lose some US$1.25 for each passenger carried, IATA says. 

Zimbabwe has been on a drive to attract larger airlines into the country. The expansion of the Victoria Falls airport has increased traffic into the resort town, while construction of a new terminal and rehabilitation of the main RG Mugabe International in Harare began last year.

However, the debts to international airlines have weakened Zimbabwe’s campaign. Zimbabwe has previously promised monthly payments of US$4 million to clear the debt, a tall order given deepening foreign currency shortages.

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