IATA expresses increased concern for the air transport Industry
IATA today outlined their concerns and recommendations for the aviation industries of Europe, Africa and the Middle East. In these, they presented adjusted outlooks for the remainder of the year.
Europe, one of the worst affected regions by the Corona virus crisis, has seen huge losses across the board, with many already having lost their jobs. IATA has said that potential revenue losses for the 2020 period now stand at US$89 billion and passenger demand at 55% below 2019 levels. Additionally, 6.7 million jobs are presently at risk due to the 90% decline in air travel, which could lead to a negative GDP impact of US$452 billion across Europe. European countries presenting large levels of uncertainty include the United Kingdom, Spain, Germany, Italy and France.
IATA recommends that European governments provide direct financial support, loans and tax relief to airlines. It also emphasises the importance of amendments to EU261 regulations, which would give airlines increased flexibility on the terms of repayments for cancelled flights.
“Every job created in the aviation industry supports another 24 jobs in the wider economy. Unfortunately, that means that when aviation jobs disappear, the impact is magnified across the economy. Our latest impact assessment shows that the number of jobs at risk has increased to 6.7 million across Europe. As airlines face an unprecedented liquidity crisis, we desperately need European government financial and regulatory support,“ - Rafael Schvartzman, IATA’s Regional Vice President for Europe.
With airlines such as Emirates pushing the soonest possible dates for regular flight resumption into July 2020, the Middle Eastern region too will face a certain drop in passenger traffic for the foreseeable future. IATA expects this to result in a US$24 billion loss In passenger revenue compared to 2019. Job losses are expected to grow to 1.2 million and full year traffic predicted to plummet by 51% compared to last year. Saudi Arabia alone is expected to see 35 million fewer passengers, resulting in a US$7.2 billion revenue loss. This puts 287,500 jobs and US$17.9 billion in contribution to Saudi Arabia’s economy at risk.
Recommendations from IATA include direct financial support, tax relief, loans, loan guarantees and support for the corporate bond market to help curb the impact of the virus on the Middle Eastern aviation industry.
“Airlines in the Middle East continue to be battered by the impact of COVID-19. Passenger traffic has all but ground to a halt and revenue streams have evaporated. No amount of cost cutting will save airlines from a liquidity crisis. The collapse of air transport will have devastating effects on countries’ economies and jobs. And in a region where aviation is a key pillar of many nations’ economies the effect will be much worse. Direct financial support is essential to maintain jobs and ensure airlines can remain viable businesses,” said Muhammad Al Bakri, IATA’s Regional Vice President for Africa and the Middle East.
Africa has seen a number of airlines, including South African Airways, struggling in the wake of the virus following the decline in tourist numbers to the region. IATA has said the region could lose up to US$6 billion in passenger revenue compared to 2019 and lose 3.1 million jobs, half of the 6.2 million aviation related jobs of the region.
IATA has said that understanding what is needed to re-open closed borders, and agreeing on solutions that can be operationalized and scaled efficiently will be key to reviving the region's aviation industry.
“Airlines in Africa are struggling for survival. Air Mauritius has entered voluntary administration, South African Airways and SA Express are in business rescue, other distressed carriers have placed staff on unpaid leave or signaled their intention to cut jobs. More airlines will follow if urgent financial relief is not provided. The economic damage of a crippled industry extends far beyond the sector itself. Aviation in Africa supports 6.2 million jobs and $56 billion in GDP. Sector failure is not an option, more governments need to step up,” said Muhammad Al Bakri, IATA’s Regional Vice President for Africa and the Middle East.
Whilst all of these figures represent a negative increase on previous estimates, it is important to note that the aviation industry has a habit of rebounding strongly after being hit by a crisis, although never has it seen one quite like this. Air travel will undoubtedly play a huge roll in re-starting the wider economy when the time comes.