Owing to the severity of travel restrictions and the expected global recession, the International Air Transport Association (Iata) has updated its analysis of the revenue impact of the COVID-19 pandemic, now estimating that industry passenger revenues could plummet $252 billion or 44 per cent below 2019’s figure.
This is in 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 $113 billion revenue loss was made on March 5, before countries around the world introduced sweeping travel restrictions that largely eliminated the international air travel market.
“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 $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,” said Iata’s director general and CEO, Alexandre de Juniac.
The latest analysis envisions that under this scenario, severe restrictions on travel are lifted after three months. The recovery in travel demand later this year is weakened by the impact of global recession on jobs and confidence. Full year passenger demand (revenue passenger kilometers or RPKs) declines 38 per cent compared to 2019. Industry capacity (available seat kilometer or ASKs) in domestic and international markets declines 65 per cent during the second quarter ended June 30 compared to a year-ago period, but in this scenario recovers to a 10 per cent decline in the fourth quarter. '
The Middle East can expect to see a 39 per cent drop in passenger demand compared to 2019 and $19 billion in passenger revenue loss.
The hardest hit region will be Europe, which can expect to see a 46 per cent decline in passenger demand this year and $76 billion in passenger revenue loss.
Africa will see a 32 per cent drop in passenger demand and $4 billlion revenue loss, while Asia Pacific will record a 37 per cent decline in travel demand and $88 billion dip in revenue loss. Latin America will see travel demand slip 41 per cent this year and a $15 billion passenger revenue loss, whereas North America is expected to report a 27 per cent drop in passenger demand and $50 billion decline in revenue loss.
"The figures speak for themselves. The air transport industry is in its deepest crisis ever," De Junaic said.
"Where international passenger traffic is allowed, we are mostly repatriating people to their home countries as governments permit. And we are also delivering vital goods—medicines and equipment to fight the virus or the most time-sensitive products feeding global supply chains," he said.
"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," he said. - TradeArabia News Service