(Posted 18th July 2024)
In a major policy change has Ethiopian Airlines announced that airline tickets for passengers outside the country will now only be available for purchase in US dollars. Previously, air transport tickets for international travelers could be bought using birr if they come to Addis Ababa, but this change is effective immediately.
The new policy will affect companies with the issue of limited dollar availability. Concerns have been raised about the potential impact of this decision, with sources indicating that it could significantly affect their operations.
Traditionally, Ethiopia has allowed foreign tourists to purchase air tickets in local currency during their visits. However, under the new system implemented by Ethiopian Airlines, these purchases must now be made in dollars.
Last week already it was reported that the inability of airlines to repatriate funds from ticket sales in Ethiopia is hindering the country’s economic growth and recovery citing industry leaders.
As of June 2024, Ethiopia had $115 million in airline funds blocked from repatriation, the third highest amount in Africa behind only Algeria ($261 million) and the CFA Franc Zone countries ($140 million). This represents over 13% of the total $880 million in blocked airline funds across the African continent.
“The blocked funds issue is a significant constraint on our ability to invest and operate effectively in the Ethiopian market,” said Kamil Alawadhi, IATA’s Regional Vice President for Africa and the Middle East. “It undermines confidence, limits route network development, and reduces the economic benefits that aviation can deliver for Ethiopia.”
IATA’s latest industry forecast projects that African airlines will return to profitability in 2024, earning a collective net profit of $100 million. However, this equates to just 90 cents per passenger – well below the global average of $6.14 per passenger. Alawadhi noted that the blocked funds crisis in countries like Ethiopia is a major factor holding back the aviation sector’s contribution to economic growth across the continent.
“Aviation is a catalyst for jobs, trade, tourism and economic development. But we can only fulfill that potential if governments ensure airlines can repatriate their revenues without unnecessary barriers,” continued Alawadhi before concluding: “Resolving the blocked funds issue in Ethiopia and across Africa needs to be an urgent priority.”
