Aviation grapples with $252b losses in flights suspension, Covid-19 measures

Tuesday March 31 2020

Kenya Airways planes are seen parked at the JKIA

Kenya Airways planes are seen parked at the Jomo Kenyatta International Airport near Nairobi, Kenya on March 6, 2019. PHOTO | THOMAS MUKOYA | REUTERS 

MICHAEL WAKABI
By MICHAEL WAKABI
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Losses by airlines caused by Covid-19 pandemic are projected to increase to $252 billion as more countries close borders to passenger flights and ground domestic operations resulting in economic recession.

In its third update on the likely trajectory of the pandemic’s impacts, last week, the International Air Transport Association (IATA) said broader restrictions to airline operations covered 98 per cent of passenger operations globally as of March 24.

“Owing to the severity of travel restrictions and the expected global recession, it is now estimated that industry passenger revenues losses could reach $252 billion or 44 per cent below 2019’s figure,” IATA chief economist Brian Pierce said during a conference call on Tuesday.

That estimate is based on the assumption that severe travel restrictions will hold for up to three months, followed a gradual economic recovery later in the year.

On March 5, IATA had predicted global revenue losses of $113 billion. That was before more countries — what has now become a global trend—introduced comprehensive travel restrictions that have effectively shut down international passenger travel.

“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.

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“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 chief executive Alexandre de Juniac.

De Juniac further added that in the few instances where international passenger traffic has been allowed, it was mostly to repatriate people to their home countries.

With one job in the airline transport industry supporting another 24 jobs in the economy, IATA says a collapse of the industry would translate into the loss of 65 million jobs globally.

Although the cargo sector has seen an upsurge in demand in the wake of shipments of emergency supplies, IATA says the reduction in passenger flights means some capacity has been withdrawn because airlines accommodated significant capacity for cargo on passenger aircraft.

Although airlines are reintroducing freighters and sometimes even adapting passenger aircraft to cargo operations in order to support the global supply chains, operators are facing challenges in countries where cargo crews are being subjected to the same quarantine measures as passengers.

“Cargo crew are being caught up in quarantine measures aimed at commercial passengers. In some cases, they are not being allowed to position on commercial flights. And there are destinations were normal accommodation for crew rest is unavailable and no alterative arrangements have been made,” de Juniac said citing Somalia and Djibouti where cargo flights were subject to the same temporary flight ban as passenger aircraft.

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