Mexican Aviation Industry to Lose US$8.13 Billion: IATA

Border closures and little support continue hurting Latin America’s aviation industry, reiterated the International Air Transport Association (IATA). In an update to its estimates on the financial impact the region faces, the association stated that the Mexican aviation industry could see up to US$8.13 billion in revenues evaporate during 2020.

The COVID-19 outbreak was an unexpected hit to an industry that was growing steadily. Efforts to contain the spread, such as border closures and shelter-in-place policies have paralyzed the industry, which might see its revenues for the year halved in comparison to 2019. While airlines across the globe are being hit at similar rates, IATA warned that those in Latin America were in an even worse position as the region has received the least financial support from local governments and has been severely affected by border closures at major travel hubs. Traffic in the region fell by 97.1 percent year-on-year during April 2020, according to Latin American and Caribbean Air Transport Association (ALTA), and the fall in revenue has already caused the two largest airlines in the region, Avianca and LATAM Airlines, to seek bankruptcy protection.

Mexico’s aviation industry is also facing significant trouble. While IATA had previously warned that the sector could lose US$6.4 billion, it revised its estimates to US$8.13 billion. The association took into account recent reports in domestic and international traffic and the extension of border closures. “(Latin America’s) situation becomes increasingly complex by the day. The numbers increased because we have already entered the fourth month and several markets have not yet opened their operations, while others, such as Colombia and Argentina, are not planning to do so until September,” said Peter Cerdá, Regional Vice President for the Americas at IATA, in a press conference reported by El Economista. While Mexico has not closed its borders, it has been impacted by border closures of major hubs in the region. During May, Mexican airlines saw demand disappear. Aeroméxico reported that its demand fell by 94.4 percent year-on-year, Viva Aerobus’ demand fell 85.71 percent and Volaris’s demand by 88.1 percent.

Latin America could lose up to US$98 billion in revenue due to the outbreak, putting at risk 4.1 million jobs. For that reason, the association urged governments in the region to implement measures to support the sector. IATA points out that Latin America is the region that has provided the least support to the aviation industry pledging only US$300 million, a sharp contrast from North America’s US$23.1 billion.