KUALA LUMPUR (March 24): The International Air Transport Association (IATA) has cut its 2020 revenue forecast for the second time this month, owing to the severity of travel restrictions and the expected global recession.
The airlines' grouping now expects the Covid-19 pandemic to cost passenger airlines up to US$252 billion in lost revenue this year — more than double the US$113 billion revenue loss it predicted on March 5. On Feb 20, it had forecast a loss of US$29 billion.
This is also 44% below 2019’s figure.
"This is in a scenario in which severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year,"it said in a statement today.
“The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates. But without immediate government relief measures, there will not be an industry left standing," it added.
IATA is of the view that airlines need US$200 billion in liquidity support simply to make it through.
"Some governments have already stepped forward, but many more need to follow suit,” said IATA’s director-general and CEO Alexandre de Juniac.
Under its latest analysis, IATA expects 2020 passenger demand, as measured by revenue passenger kilometers, to decline 38% from 2019.
Industry capacity (available seat kilometer or ASKs) in domestic and international markets is expected to fall by 65% during the second quarter ended June 30 compared to a year-ago period, but in this scenario, where travel restrictions are lifted after three months, recovers to a 10% decline in the fourth quarter.
In a separate statement, IATA welcomed the support of those governments around the world that have provided financial relief to airlines and urged other governments to follow suit before more damage is done.
“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. And 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,” de Juniac said.
"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. 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," he added.
On the governments' relief measures, 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.
Besides that, it is also calling for tax reliefs, as well as loans, loan guarantees and support for the corporate bond market by the government or central banks.