INTERNATIONAL. The International Air Transport Association (IATA) has said that airline industry passenger revenues could fall by US$252 billion or -44% below the 2019 figure due to the impact of travel restrictions and the expected global recession brought on by the COVID-19 crisis.
The figures are based on a scenario in which severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year.
IATA’s previous analysis of up to a US$113 billion revenue loss was made on 5 March, before countries around the world introduced sweeping travel restrictions that largely eliminated the international air travel market.
IATA Director General and CEO Alexandre de Juniac said: “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 US$200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit.”
The latest analysis envisions that under this scenario, full-year passenger demand (revenue passenger kilometres or RPKs) declines -38% compared to 2019. Industry capacity (available seat kilometre or ASKs) in domestic and international markets declines -65% during the second quarter ended 30 June compared to a year-ago period, but in this scenario recovers to a -10% decline in the fourth quarter.
De Juniac added: “The figures speak for themselves. The air transport industry is in its deepest crisis ever. IATA has been asking governments to provide a lifeline of financial support. A liquidity crisis is coming at full speed. Revenues have fallen off a cliff. And no amount of cost cutting can save the day if no cash is coming in the door. Without financial relief airlines will go bust. And that could happen en masse.
“Some commentators say, ‘so what?’ I ask them to think of the consequences. Letting this industry fail will have an impact far beyond the livelihoods of the 2.7 million people airlines employ. And it will go beyond the 65 million other jobs in the value chain. If we don’t have a viable aviation industry when we come out of this crisis—whenever that may be—re-starting the global economy will be severely constrained in almost all sectors. And everybody will suffer much longer than necessary.
“Many governments understand the critical role of aviation. Among countries committing to financial relief are Singapore, China, Hong Kong, Australia, Brazil, New Zealand, Qatar, Colombia, Sweden and Denmark, Norway and Finland. Several other governments are in the consideration stage—including a US$58 billion package in the US and significant support measures from the European Central Bank.
“Every day matters. The potential for a $252 billion fall in revenues is an alarm bell. This is apocalypse now and you must act fast.”