USD 2.4 Billion Off the Radar: Why Pakistan Must Overhaul Airlines Payment Gateways Now
Opinion
This is written by Imran Aslam Khan, an Aviation Professional and Businessman.
Pakistan represents a high-demand aviation market, anchored by a global diaspora of over 10 million expatriates alongside growing outbound leisure and religious tourism. Across the country's major airports, airlines handle an average of 2.2 million passengers per month, generating an annual volume of approximately 26.8 million travelers.
This substantial passenger flow creates a sizable fiscal base, with federal excise duties, advance taxes, and airport charges typically accounting for 15% to 35% of the total ticket price depending on the destination and cabin class.
Pakistan Prepares to Welcome 4,000 Indian Sikh Pilgrims for Guru Nanak’s 557th Prakash Purab
Russian Ambassador to US Alexander Darchiev Dies Suddenly at 66
Renowned Urdu Writer, Poet and Humorist Prof. Mashkoor Hussain Yaad Dies at 92
For more such Opinions & Blogs, click here.
Since the figures are largely dependant on the sectors, it is important that we provide breakdown for the better understanding of the taxation on air travellers. So here is the breakdown of applied taxes.
- Federal Excise Duty (FED) on International Economy. Passengers flying economy or economy plus pay a flat Rs 12,500 per ticket (or Rs 5,000 for verified labor visas to GCC countries). On a short-haul flight to the UAE costing Rs 60,000–80,000, this duty alone equals 15% to 20% of the fare.
- Federal Excise Duty (FED) on International Business/First Class. Following revisions in the Finance Act 2026, premium-class FED was reduced to Rs 25,000 (Middle East/Africa), Rs 40,000 (Europe/Far East/Australia), and Rs 50,000 (the Americas).
- Federal Excise Duty (FED) on Domestic Flights. Domestic tickets carry a fixed FED of Rs 900 on short routes and Rs 1,500 on long routes.
- Additional Taxes and Airport Fees. Tickets also include Advance Income Tax (5% on domestic tickets for filers; higher fixed slabs on international tickets), Passenger Service Charges, Embarkation Fees, and Infrastructure Development Charges. When combined with FED, total government levies commonly make up 15% to 35% of the final ticket price.
Ambiguity surrounding exemptions for verified laborers and tax filers remains a sore point, with travelers seldom receiving relief in practice.
Veteran Media Professional Abid Abdullah Passes Away
Rahmat Shah becomes first Afghanistan cricketer to break into ICC Test top 10
Punjab Government Appoints Malik Salman Aslam as Prosecutor in Punjab Narcotics Force
While the statutory rules for airline tax collection exist under Federal Board of Revenue (FBR) regulations, the exact collection and reconciliation data are not transparently disclosed to the public—making it difficult for taxpayers to verify whether the taxes collected on tickets are fully deposited into the national treasury.
Because ticket taxes vary widely across routes, cabin classes, exemptions, and foreign booking channels, simply knowing the total passenger count cannot determine the exact tax collected by airlines and remitted to the FBR.
One proposed reform to ensure genuine tax collection is to require ticket payment gateways to be routed through Pakistani banks so that taxes are deducted and remitted directly to the FBR at the source.
While stringent, such a measure would address a major gap: currently, many airlines—and at times even domestic carriers—process online card payments through overseas gateways. As a result, ticket payments are settled abroad as cross-border card transactions, triggering foreign exchange outflows and additional bank charges while limiting direct oversight by the State Bank of Pakistan (SBP) and tax authorities.
The core of the issue lies in a glaring financial discrepancy within Pakistan’s aviation market. Historical ticket sales data, compiled from various industry sources, estimates total annual revenue at USD 3.2 to 3.6 billion. Within this figure, Pakistan International Airlines (PIA) accounted for approximately USD 750 million, other domestic carriers generated a combined USD 65 million, and officially recorded foreign remittances stood at USD 411 million. Combined, these documented streams total USD 1.226 billion—leaving an unaccounted gap of USD 2 to 2.4 billion every year.
Ramon Airport Evacuated, Flights Suspended After 4.5-Magnitude Earthquake Near Eilat, Israel
This massive shortfall raises critical questions for regulators and economists alike:
- Traceability: Can financial authorities accurately track this missing capital?
- Offshore Processing: Was this revenue processed through foreign payment gateways and retained offshore, bypassing Pakistan’s banking system entirely?
- Tax Compliance: Did the operating carriers fulfill their statutory tax obligations on these sales?
- Gateway Preferences: Why do even domestic airlines favor foreign payment gateways over local financial infrastructure?
- Macroeconomic Impact: If these billions were properly captured in the State Bank of Pakistan’s (SBP) ledgers, would the country still require repeated International Monetary Fund (IMF) bailouts?
Moreover, industry projections suggest that the USD 3.2 to 3.6 billion benchmark is conservative; recent market analyses indicate Pakistan’s broader flight market generates upwards of USD 6 billion annually, meaning the actual unreported volume could be substantially higher.
Unknown Persons Open Fire on CRPF Checkpost in Kashmir’s Kulgam, Several Personnel Injured
Currently, roughly 40 to 42 scheduled airlines—comprising 4 active domestic carriers and around 36 or 37 foreign airlines—operate across Pakistan's international and domestic airports. Foreign carriers alone capture nearly two-thirds of Pakistan's international ticket revenue, with top international operators generating hundreds of millions of dollars each from Pakistani routes. Across the sector, airlines operating to and from Pakistan extract hundreds of millions of dollars in net revenues and repatriated earnings annually.
To stem this capital flight and enforce fiscal transparency, state authorities must take decisive action and implement a rigorous tax collection framework for all ticket sales:
- Mandate SBP-Controlled Payment Gateways: All ticket sales for travel originating in or destined for Pakistan must be restricted exclusively to payment gateways regulated by the State Bank of Pakistan.
- Integrate Real-Time FBR Tax Collection: Ticket purchases should be routed through a Federal Board of Revenue (FBR) collection mechanism embedded directly within Pakistan's payment gateway, with zero exemptions permitted.
- Enforce after departure Automated Flight Sales Reporting: Airlines must be required to submit verified passenger and sales manifests for every flight directly to the FBR via an automated electronic reporting system.
- Commission Independent International Audits: The government should appoint the world's top three auditing firms to conduct separate, comprehensive forensic tax audits covering the past five years of passenger and sales taxes paid by all operating airlines. Any identified shortfalls must be recovered immediately to deter future evasion and establish an airtight tax regime.
Indian President’s Bodyguard Shot in Head During Diwali Firecracker Dispute in UP
Six Coaches of Kolkata-Sairang Express Derail Near Guwahati, Several Passengers Injured
Concluding Call-to-Action:
Pakistan cannot afford to let billions of dollars in aviation economic activity vanish into offshore accounts while struggling to stabilize its foreign reserves. Reclaiming this lost revenue does not require reinventing the wheel; it requires the political will to enforce basic financial sovereignty over transactions originating for the ticket sales by the airlines.
By mandating State Bank-regulated payment gateways, embedding automated FBR tax collection at the point of sale, and commissioning independent forensic audits, policymakers can immediately plug one of the country’s largest fiscal leaks. It is time for the Ministry of Finance, the Federal Board of Revenue, and the Pakistan Civil Aviation Authority to act in concert—ensuring that every ticket sold to or from Pakistan contributes fairly to the nation’s economic recovery.
Happy landings!
For more such Opinions & Blogs, click here.
US House of Representatives Rejects Impeachment Bid Against Defense Secretary Pete Hegseth
New COVID-19 Variant PJ.2.1 Detected in Multiple Countries
Asad Toor Claims Maryam Nawaz’s Control Over Punjab Government’s Luxury Jet Restricted
Bangladesh PM Tarique Rahman Meets Turkish President Erdoğan on Sidelines of COP31
Nvidia Shares Plunge 6% as Microsoft Overtakes Chipmaker as World’s Second-Most Valuable Company
Pakistan Stock Market Soars 5,448 Points, KSE-100 Closes at Record 179,335
US Court Allows Summons to Ajit Doval, Former RAW Chief Samant Goel in Pannun Case
The article is written by Imran Aslam Khan, an Aviation Professional and Businessman.
Stay tuned to Baaghi TV for more. Download our app for the latest news, updates & uncensored content!
Further Reads
