IATA estimate of Covid-19 loss too low, say airline officials

Thursday، 26 March 2020 01:53 AM

By Alex Macheras 

The fast pace of the Covid-19 crisis means that, by the time you are reading this, there would have been new developments, changes, alterations and updates in the air travel world — as aviation continues to grapple with its largest crisis in the history of commercial flight. However, with aviation being impacted in such an immense and unprecedented way, in this week’s column I shall take you through as many of the latest aviation updates from around the world as fit onto this page — updates that affect business, employees, passengers and cargo.
Perhaps most notably, the International Air Transport Association (IATA) updated its analysis of the revenue impact of the Covid-19 pandemic on the global air transport industry, and it now estimates that industry passenger revenues could plummet $252bn or 44% below 2019’s figure. This is in a scenario in which the severe travel restrictions we are seeing now last for up to three months, followed by a gradual economic recovery later this year.
This week I’ve spoken to senior executives at three airlines: one in the United States, one in South-East Asia, and one in East Africa. Each were of the belief that IATA’s new estimate loss is likely still too low of a figure, and that given the industry has never suffered in such an immense way before, the true figure of global passenger revenue losses could stand at double the published amount, should this pandemic continue its widespread.
IATA’s director general and CEO, Alexandre de Juniac explained: “The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates. But without immediate government relief measures, there will not be an industry left standing. Airlines need $200bn in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,”
Government intervention remains the only way to ensure airlines are able to survive for the long-term, and countries are already pledging their support to their respective aviation industries in order to protect employees, airlines, and the wider aviation business. Australia has announced an A$715mn (US$430mn) aid package comprising refunds and forward waivers on fuel taxes, and domestic air navigation and regional aviation security charges.
Brazil is allowing airlines to postpone payments of air navigation and airport fees.
China has introduced a number of measures, including reductions in landing, parking and air navigation charges as well as subsidies for airlines that continued to mount flights to the country.
Hong Kong Airport Authority, with government support, is providing a total relief package valued at HK$1.6bn (US$206mn) for the airport community including waivers on airport and air navigation fees and charges, and certain licensing fees, rent reductions for aviation services providers and other measures.
New Zealand’s government will open a NZ$900mn (US$580mn) loan facility to the national carrier as well as an additional NZ$600mn relief package for the aviation sector.
Norway’s government is providing a conditional state loan-guarantee for its aviation industry totalling NKr6bn (US$533mn).
Qatar’s Minister of Finance has issued a statement of support for the national carrier.
Singapore has undertaken relief measures valued at S$112mn (US$82mn) including rebates on airport charges, assistance to ground handling agents, and rental rebates at Changi Airport.
Finally, Sweden and Denmark announced $300m in state loan guarantees for the national carrier. 
Meanwhile, the UK government is drawing up plans to buy equity stakes in airlines and other companies hardest hit by the coronavirus crisis, after warnings that the economic packages it has announced so far will not be enough to save them. The plans would see the UK taxpayer inject billions of pounds into companies including British Airways in exchange for shares that would eventually be sold back to private investors.
Britain’s transport secretary, promised that the government would not allow the collapse of “world-leading, well-run, profitable” airlines — leaving a question mark for those airlines already of a financially-fragile nature before the current crisis.
easyJet reacted to the news, stating “We fully support and welcome the government’s commitment to support airlines during these unprecedented times. Our focus is on measures to help with short-term liquidity and protect jobs, but we can’t comment on the finances of other airlines or what action they might require.”
Over in the US, the senate has raised the prospect of taking equity stakes in their domestic airlines. A stimulus bill unveiled by Senate Republicans this week earmarked $50bn in loans and loan guarantees to airlines.

* The author is an aviation analyst. Twitter handle: @AlexInAir

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