The global airline industry body has warned that Pakistan has become “very challenging” to serve with flights as carriers struggle to repatriate dollars, adding to difficulties for foreign companies operating in the crisis-hit country.

Pakistan is suffering from an escalating financial crisis, with perilously low levels of foreign reserves leading to shortages and rising prices of essential goods. Companies are contending with delays in importing or converting currency, and analysts have warned that the country is at risk of default.

Air carriers, which sell tickets in local currency but need to repatriate dollars to pay for expenses such as fuel, have been hit particularly hard. The International Air Transport Association said $290mn of funds were stuck in the country as of January, the most recent data available, up nearly a third since December. Pakistan is holding the second-largest amount of foreign currency from airlines globally, after Nigeria.