COVID-19 Will Cost Airlines US$252 billion: IATABy Alicia Arizpe | Wed, 03/25/2020 - 10:07
Flight cancellations and closed borders spurred by the COVID-19 pandemic have put airlines in high alert. IATA, the trade association that represents the interests of most airlines in the world, estimated that the impact of the outbreak in the industry might be deep and prolonged. The association recently estimated that airlines in all corners of the globe might lose up to US$252 billion in revenues during 2020 due to the pandemic.
The association has been tracking the impact of COVID-19 in the aviation industry and in early March, it predicted a US$113 billion loss in revenue, which it called “a worst-case scenario.” However, this seemed to be a false rock bottom as IATA’s estimation was recently revised following more travel restrictions in more countries. Alexandre de Juniac, Director General and CEO of IATA, warned that “the airline industry faces its gravest crisis” and called for many governments to implement several measures “to avoid an industry calamity.”
IATA has offered three suggestions. The first is direct financial support of up to US$200 billion for airlines to overcome the losses caused by travel restrictions. The second is government or central bank loans, as private banks might be reluctant to grant credit to airlines during the crisis. Finally, the association called for governments to support rebates or tax relief measures during this period.
de Juniac recognized that some might question the relevance of supporting airlines during the pandemic but highlighted their importance in the global economy as they transport 35 percent of global trade and support up to 70 million jobs in travel and tourism.