The International Air Transport Association (IATA) says there is now virtually no passenger travel in the air, only cargo and said that airlines were in an “apocalypse now” moment and the sector is facing losses of up to $252 billion from Covid 19.
“There is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry,” said Alexandre de Juniac, IATA’s chief executive.
According to IATA’s latest analysis, released today, annual passenger revenues will fall by $252 billion if severe travel restrictions remain in place for three months. That represents a 44% decline compared to 2019. This is well-over double IATA’s previous analysis of a $113 billion revenue hit that was made before countries around the world introduced sweeping travel restrictions.
“It did not seem possible, but in a matter of days, the crisis facing airlines worsened dramatically. We are 100% behind governments in supporting measures to slow the spread of COVID-19. But we need them to understand that without urgent relief, many airlines will not be around to lead the recovery stage. Failure to act now will make this crisis longer and more painful. Some 2.7 million airline jobs are at risk. And each of those jobs supports a further 24 in the travel and tourism value chain. Some governments are already responding to our urgent calls, but not enough to make up the $200 billion needed,” said de Juniac.
In urging more government action, de Juniac cited examples of state support such as Australia’s A$715 million (US$430 million) aid package comprising refunds and forward waivers on fuel taxes, and domestic air navigation and regional aviation security charges and Brazil allowing airlines to postpone payments of air navigation and airport fees.
In addition to this support, the European Central Bank, and the United States Congress are expected to enact significant measures to aid the airline industry in their respective jurisdictions as part of large packages of broader economic measures.
“This shows that states around the globe, recognize the critical role that aviation plays in the modern world. But many others have still to act to preserve the important role of this sector. Airlines are an economic and employment engine. This is demonstrated even as passenger operations shrink, as airlines continue to deliver cargo that is keeping the economy going and getting relief supplies where they are needed most. The ability for airlines to be a catalyst for economic activity will be vital in repairing the economic and social damage that COVID-19 is now causing,” said de Juniac.
IATA called direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19, and loans, loan guarantees and support for the corporate bond market by the Government or Central Banks.
Finally it also wants tax relief: Rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other government-imposed levies.