By EMMIE V. ABADILLA
The annual passenger revenues of airlines will fall by $252 billion if severe travel restrictions remain in place for three months, plummeting 44 per cent versus 2019 figures and over double the International Air Transport Association (IATA’s) previous projection of a $113-billion revenue hit made before many countries imposed sweeping travel restrictions.
“Airlines are fighting for survival in every corner of the world. Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business. For airlines, it’s apocalypse now," warned Alexandre de Juniac, IATA’s Director General and CEO.
IATA's latest estimate shows Asia-Pacific airlines can lose 37per cent in terms of passenger revenues (measured in Revenue Passenger Kilometers or RPKs) for this year, bleeding USD $88 Billion.
The Middle East stands to lose 39 per cent, translating to $19 billion.
North American airlines stand to lose 27 per cent passenger revenues, equivalent to $50 Billion while Latin American airlines lose 41 per cent valued at $15 Billion.
European airlines stand to lose the most, with a 46 per cent revenue loss worth $76 Billion.
African airlines expect to lose 32 percent, or $4 Billion.
Already, "There is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry,” he underscored .
“It did not seem possible, but in a matter of days, the crisis facing airlines worsened dramatically. We are 100% behind governments in supporting measures to slow the spread of COVID-19. But we need them to understand that without urgent relief, many airlines will not be around to lead the recovery stage," according to the IATA CEO.
"Failure to act now will make this crisis longer and more painful. Some 2.7 million airline jobs are at risk. And each of those jobs supports a further 24 in the travel and tourism value chain. Some governments are already responding to our urgent calls, but not enough to make up the $200 billion needed,” de Juniac reiterated.
IATA is calling for direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19.
Loans, loan guarantees and support for the corporate bond market by the government or Central Banks will also help.
The corporate bond market is a vital source of finance, but the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies.
Airlines also need tax relief. Rebates on payroll taxes paid to date in 2020 or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other government imposed levies are needed.
IATA cited the support of governments around the world so far and urged others to follow suit before more damage is done.
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 naviga¬tion 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 reduc¬tions 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 pro¬viding 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.