Airlines Around the World Struggling to Survive

IATA has called for governments to work with the
industry on confidence-boosting measures in the face of an
anticipated slow recovery in demand for air travel.

“Passenger confidence will suffer a double whammy
even after the pandemic is contained—hit by personal economic
concerns in the face of a looming recession on top of lingering
concerns about the safety of travel. Governments and industry must
be quick and coordinated with confidence-boosting measures,” said
Alexandre de Juniac, IATA’s Director General and CEO.

An IATA-commissioned survey of recent travelers
found that:

– 60% anticipate a return to travel within one to
two months of containment of the COVID19 pandemic but 40% indicate
that they could wait six months or more; and

Aircraft flying overhead. Picture by Steven Howard of Click to enlarge.

– 69% indicated that they could delay a return to
travel until their personal financial situation stabilizes.

Early indications of this cautious
return-to-travel behavior are seen in the domestic markets of
China and Australia, where new coronavirus infection rates have
fallen to very low levels:

China: Domestic
demand began to recover when the rate of new COVID19 infections in
China fell into single digits and rapidly headed towards zero
(measured by new infections as a percentage of the seven-day
moving average of total COVID19 cases). While there was an early
upswing from mid-February into the first week of March, the number
of domestic flights plateaued at just over 40% of pre-COVID19
levels. Actual demand is expected to be significantly weaker as
load factors on these flights are reported to be low. China
accounts for some 24% of all domestic passengers.

Australia: Domestic
demand continued to deteriorate even after the rate of new
infections fell into single digits which triggered an initial
recovery in the Chinese domestic market. In fact, there is still
no sign of a recovery (total domestic flights are at 10% of pre-
COVID19 levels) even as new infections nears zero. Australia
accounts for 3% of all domestic travelers.

Domestic market behavior is a critical indicator
as the post-pandemic recovery is expected to be led by domestic
travel, followed by regional and then intercontinental as
governments progressively remove restrictions.

“In some economies, the spread of COVID19 has
slowed to the point where governments are planning to lift the
most severe elements of social distancing restrictions. But an
immediate rebound from the catastrophic fall in passenger demand
appears unlikely. People still want to travel. But they are
telling us that they want clarity on the economic situation and
will likely wait for at least a few months after any ‘all clear’
before returning to the skies. As countries lift restrictions,
confidence boosting measures will be critical to re-start travel
and stimulate economies,” said de Juniac.

This week IATA is conducting regional summits with
governments and industry partners to begin planning for an
eventual re-start of the air transport industry.

 “The passenger business came to a halt with
unilateral government actions to stop the spread of the virus. The
industry re-start, however, must be built with trust and
collaboration. And it must be guided by the best science we have
available. Time is of the essence. We must start building a
framework for a global approach that will give people the
confidence that they need to travel once again. And, of course,
this will need to be shored-up by economic stimulus measures to
combat the impact of a recession,” said de Juniac.

Relief Measures

In addition to confidence-building and stimulus
measures, the anticipated slow recovery also adds urgency to the
need for emergency financial relief measures.

IATA estimates that some 25 million jobs in
aviation and its related value-chains, including the tourism
sector, are at risk in the current crisis.

Passenger revenues are expected to be $314
billion below 2019 (-55%) and airlines will burn through about $61
billion in liquidity in the second quarter alone as demand
plummets by 80% or more.

Some governments have stepped up. Examples of
recent relief measures include:

– Colombia added significant tax relief for
airline tickets, jet fuel and tourism to their already
comprehensive package of relief measures;

– Hong Kong provided another HK$2 billion in
relief, including purchasing 500,000 tickets in advance from Hong
Kong-based carriers to inject liquidity into the airlines;

– Senegal announced US$128 million in relief for
the tourism and air transport sector;

– Seychelles has waived all landing and parking
fees for April to December 2020;

– The 41 Eurocontrol states and their air
navigation service providers (ANSPs) delayed EUR1.1 billion in air
navigation service charges for February-May until November and
through to 2021. Last week a further 13 states and ANSPs also
delayed terminal charges, totaling over EUR190 million, for a
similar period.

“This is an emergency. Airlines around the world
are struggling to survive. Virgin Australia which entered
voluntary administration demonstrates that this risk is not
theoretical. Governments will need financially viable airlines to
lead the economic recovery. Many of them won’t be around to do
that if they have run out of cash. The number of governments
recognizing that relief measures are needed is growing. But the
crisis is also deepening. We thank the governments that have
committed to provide the industry a lifeline and look forward to
quick implementation. For the others, each day matters. Millions
of jobs are at stake and relief cannot come fast enough,” said de

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