Aviation Industry’s Lost Revenue to Reach US$419 Billion: IATA

The damage COVID-19 is wrecking on the global aviation industry seems worse than expected. The International Air Transport Association (IATA) updated today its economic projection for the industry estimating that losses in revenue could climb up to US$419 billion.

The future of the aviation industry seems turbulent as the world continues to grapple with the COVID-19 outbreak and the subsequent economic crisis caused by the halt in non-essential activities. While the sector had perceived worrisome signals from early March, the situation is proving worse than expected as demand shrank to minimums not seen in decades. IATA explains that the low demand is causing airlines to see half their potential revenue evaporate in front of their eyes. While the sector saw US$838 billion in revenue during 2019, the global slowdown due to the COVID-19 outbreak is expected to halve the potential revenue the industry expected for 2020 to US$419 billion. Moreover, the low demand puts many airlines at risk of finishing the year in red as IATA explains that airlines are facing significant losses. “Financially, 2020 will go down as the worst year in the history of aviation. On average, every day of this year will add US$230 million to industry losses. In total, that is a loss of US$84.3 billion,” said Alexandre de Juniac, Director General and CEO of IATA. Mexican airlines are expected to lose US$5.6 billion during the year.

IATA had previously warned that the industry was facing significant risks from the unprecedented reduction in demand. In March, the association warned that the sector was on its way to lose US$113 billion in revenue, only to update its forecast a few weeks later to US$252 billion and later a to US$314 billion. However, IATA updated its estimations to take into account recent data that points that during April traffic fell 95 percent against 2019 levels. While the association explains that there are signs that traffic is improving, the damage is expected to last well into 2021 but only if the outbreak is properly contained. “Provided there is not a second and more damaging wave of COVID-19, the worst of the collapse in traffic is likely behind us,” said de Juniac.

The global aviation crisis caused by COVID-19 has already caused the bankruptcy of Latin America’s two largest airlines. IATA and other industry associations reiterated their call for governmental support for the troubled sector and urged for the implementation of the International Civil Aviation Organization’s (ICAO) plan to restart the industry. “There is no tried and true playbook for a recovery from COVID-19 but the ICAO Takeoff restart plan outlines globally harmonized. It is important that the industry and governments follow it so that travelers will have the maximum reassurance about their safety,” said de Juniac.