“The ICCS enables airline treasurers to centrally control and repatriate their worldwide sales funds,” explains Muhammad Albakri, IATA’s SVP for Financial Settlement and Distribution Services. “It’s an incredibly important provision that simplifies an extremely complex and costly area.”
The advantages of the ICCS
Airline networks are becoming ever more expansive as they strive to answer the demand for greater connectivity. The number of countries airlines serve is therefore growing. And for each country in which an airline has sales, it needs a local account to place revenues earned in the local currency. For airlines flying to multiple countries, this means numerous local accounts and a profusion of currencies.
Repatriating that money can be a costly challenge. Every central bank has bespoke rules, sometimes including stringent restrictions, making paperwork and compliance resource heavy for airlines. Moreover—because airlines must convert the local currency into dollars or similar—they are extremely vulnerable to significant losses in conversion rates.
The ICCS takes these concerns away. Airlines can keep as much local currency as they need to pay for staff and office costs and then, rather than have the effort of repatriating the remainder, they simply join the ICCS.
“The ICCS has scale and so can access the best available foreign exchange rates,” says Albakri. “It can also deal with all the repatriation issues, access greater liquidity to move more money, and even facilitate payments to service providers. The ICCS represents a significant opportunity for airlines to save cost and improve cash flow.
“Cash flow is vital to every airline,” he continues. “With the ICCS, cash flow uncertainty is greatly reduced. Airlines know what revenues they are getting and when—and are aware of any issues well ahead of time.”
Importantly, the ICCS is also a source of currency related information. Effectively, airlines are warned early of potential problems, and this allows them to adjust their risk assessment accordingly.
Expanding the ICCS
To ensure as many airlines as possible have the advantages of the ICCS, IATA is looking to expand both the service’s footprint and currency portfolio. And it is continuing to work with its various banking partners to ensure all ICCS members enjoy the best possible exchange rates.
But there are two other major developments. The first is the move to embrace other stakeholders in the aviation ecosystem. General sales and service agents, travel agents, and freight forwarders are among those that have similar concerns regarding the repatriation of funds and so would benefit from the ICCS.
The second advance is encompassing credit card sales. Essentially, airlines will be able to tell an acquirer to send their money to the ICCS, saving on poor conversion rates and lengthy delays in releasing the funds.
“The service is available in 44 countries, and we are already working with American Express,” says Albakri. “We are also working with specific countries, such as India and the Philippines. The trend is clear and credit cards are increasingly important, so the more we can do in this area, the more money we can save for ICCS participants.
Overcoming ICCS challenges
Repatriating money from foreign sales is a complicated process, however, especially as every Central Bank has a different objective and different rules. Some simply can’t accommodate a system like the ICCS within their existing framework. Others are responding to volatile geopolitical conditions and making it harder for money to cross their borders.
Occasionally, funds can even be blocked. Fortunately, the amount of blocked funds dropped in the first half of 2024 to $1.68 billion, following extensive work with the Central Bank of Nigeria, which cleared the best part of $850 million.
Blocked funds in Bangladesh and Pakistan—amounting to $620 million—remain a concern, however. In Bangladesh, the solution is in the hands of the Central Bank, which must prioritize aviation’s access to foreign exchange in line with international treaty obligations. In Pakistan, there needs to be efficient alternatives to the long, complicated process of obtaining audit and tax exemption certificates.
“The ICCS continues to grow, which is a testament to its success,” concludes Albakri. “And we will continue to enhance it, adding value to all participants. All the indicators suggest the services provided by the ICCS will become even more important in the coming years.”
ICCS benefits
In addition to the advantages listed above, the ICCS
* provides more effective cash planning and increased transparency in cash flow management
* reduces the time spent on international banking activities, resulting in manpower savings
* accelerates repatriation of foreign sales funds, resulting in improved working capital management and reduced foreign exchange risk.
* reduces banking fees and transfer charges, allowing for further cost reduction thanks to competitive service fees
* allows for centralized payment management, thus reducing the need for multiple banking relationships.
