The International Air Transport Association (IATA) has updated its analysis of the potential impact of coronavirus on the global airline industry, more than doubling an estimate it issued just a couple of weeks ago.
The Association now believes global passenger revenues could fall by $252 billion this year – 44 per cent down on 2019’s figures. This is up from the estimated $113 billion which IATA published earlier this month.
IATA said that the previous figure was published “before countries around the world introduced sweeping travel restrictions that largely eliminated the international air travel market”.
It said that the new figure was based on “severe travel restrictions” lasting for up to three months, followed by a gradual economic recovery later this year.
“The airline industry faces its gravest crisis,” warned IATA’s Director General and CEO, Alexandre de Juniac . “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 $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit.”
IATA praised several governments around the world for their state support for the airline industry, citing examples including:
- Australia has announced an 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.
- 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 (HKAA), with government support, is providing a total relief package valued at HK$1.6 billion (US$206 million) 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$900 million (US$580 million) loan facility to the national carrier as well as an additional NZ$600 million relief package for the aviation sector.
- Norway’s government is providing a conditional state loan-guarantee for its aviation industry totaling NKr6 billion (US$533 million).
- Qatar’s Minister of Finance has issued a statement of support for the national carrier.
- Singapore has undertaken relief measures valued at S$112 million (US$82 million) including rebates on airport charges, assistance to ground handling agents, and rental rebates at Changi Airport.
- Sweden and Denmark announced $300m in state loan guarantees for the national carrier.
But yesterday the UK Chancellor Rishi Sunak said that the government would only step in to help airlines as “a last resort”, urging carriers to try and raise money from shareholders, adding that decisions would be taken on a “case-by-case” basis.
The Airport Operators Association, which represents UK airports, said that the apparent U-turn in government policy was “disappointing”.
“After having publicly announced a support package for airports and airlines, we’re surprised by where we find ourselves today,” said CEO Karen Dee. “Our industry will now have to fight on its own to protect its workforce and its future.”
“With passenger numbers approaching close to zero, UK airports have seen a major drop in revenue. They are taking unprecedented steps to safeguard airport staff and operations through this crisis, which could include in some cases considering shutting down for a period of time. This could have major impacts for UK communities and businesses.
“Even amidst the crisis, airports are continuing to provide lifeline services to the Highlands and Islands communities and the UK Crown Dependencies and freight services to ensure vital supplies (including medical supplies) arrive in the UK. They are also the base of operations for UK Search and Rescue operations, for offshore oil, gas and wind farms that provide vital energy supplies and they play a critical role in the management of UK airspace.
“All of that is now put at risk by the Government’s decision. While countries across Europe have recognised the vital role airports play and are stepping into the breach, the UK Government’s decision to take a case-by-case approach with dozens of UK airports is simply not feasible to provide the support necessary in the coming days.
“Not only does the decision today leave airports struggling to provide critical services, it will hamper the UK recovery. In addition to financial support, the support package should have included sector-wide regulatory alleviations, to reduce costs today and put in place the measures necessary to support airports, ground handling agents, air navigation service providers and others in their operational recovery once the pandemic recedes.
“We urge the Government to reconsider and at the very least provide a comprehensive package of support for airports and ground-based services, to ensure the UK’s critical aviation infrastructure is ready to take off once the COVID-19 pandemic recedes. This should include:
- Increase the flexibility of the employment retention scheme to take account of the airport context, including for example around mandatory training and certification requirements and ability to maintain a skeleton staff to continue critical operations
- Extending business rate relief to airports, airport retail and hospitality businesses and other airport support companies.
- In addition to VAT deferral, deferral of all other taxes, such as corporation tax, for the duration of global flight restrictions.
- Require banks and bondholders to temporarily not enforce financial performance-based banking covenants.
- Suspend regulatory costs on airports where possible, including by deferring deadlines on mandated investments such as Next Generation security scanning equipment
- Provide relief from airport policing costs.”
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