US$314 Billion in Lost Revenue Looms Over Aviation IndustryBy Alicia Arizpe | Wed, 04/15/2020 - 11:03
Potential outcomes for the aviation industry continue to worsen due to the COVID-19 crisis. The International Association of Air Transport (IATA) updated its 2020 forecast for a second time in six weeks, warning that the sector was set to lose US$314 billion amid the crisis.
The association has closely tracked the effect of the outbreak in the aviation industry as the spread of policies to contain the virus led many to avoid travel for work and leisure, leading airlines to cancel most of their flights and turning airports into airplane parking grounds. This halt in operations is causing airlines across the globe to lose revenue at an unprecedented rate. In early March, IATA warned that the drop in air travel caused by COVID-19 could cost the global aviation industry US$113 billion loss in revenue. At the time, the association called this figure “a worst-case scenario.” However, just a few weeks later, IATA acknowledged that the situation was much worse than expected. The association revised this figure to place loses in revenue at up to US$252 billion as its Director General and CEO, Alexandre de Juniac, warned that “the airline industry faces its gravest crisis.”
The situation keeps worsening. The association was forced to update its figures again in April 14, as many countries implemented or extended their restrictions for domestic travel and the virus spread throughout Africa and Latin America, where COVID-19 was not as widespread when the second report was released. Now, passenger demand for 2020 is expected to be 48 percent lower than in 2019, according to the association, as the world heads to an economic recession. IATA now estimates that the global aviation industry will lose up to US$314 billion in revenue, which is over half of what the global aviation industry earned in 2019.