COVID-19: IATA calls for relief for African & Middle Eastern airlines

Trade group says pandemic shutdowns will cost airlines billions in losses and millions of jobs lost

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The global trade group representing the world’s airlines is calling for additional aid to be given to airlines in the Middle East and African or the two regions will see billions of dollars lost and millions of jobs erased as a result of the COVID-19 pandemic that has killed more than 190,000 worldwide.

A screenshot of the Johns Hopkins University virus tracking site taken on 24 April. To access the live site, click on the image. (PHOTO: Matt Driskill)

The International Air Transport Association (IATA), also warned that airlines are struggling to just stay in business and that many will face bankruptcy as their small cash reserves run dry in the next few months.

Africa

The region’s airlines could lose US$6 billion of passenger revenue compared to 2019. That is US$2 billion more than was expected at the beginning of April. Job losses in aviation and related industries could grow to 3.1 million. That is half of the region’s 6.2 million aviation-related employment and more than the previous estimate of 2 million. Full-year 2020 traffic is expected to plummet by 51 percent compared to 2019 compared to the previous estimate of 32 percent. GDP supported by aviation in the region could fall by US$28 billion from US$56 billion compared to a previous estimate of a US$17.8 billion decline. These estimates are based on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental.

Countries likely to be hardest hit include:

  • South Africa: 14.5 million fewer passengers resulting in a US$3.02 billion revenue loss, risking 252,100 jobs and US$5.1 billion in contribution to South Africa’s economy.
  • Nigeria: 4.7 million fewer passengers resulting in a US$0.99 billion revenue loss, risking 125,400 jobs and US$0.89 billion in contribution to Nigeria’s economy
  • Ethiopia: 2.5 million fewer passengers resulting in a US$0.43 billion revenue loss, risking 500,500 jobs and US$1.9 billion in contribution to Ethiopia’s economy.
  • Kenya: 3.5 million fewer passengers resulting in a US$0.73 billion revenue loss, risking 193,300 jobs and US$1.6 billion in contribution to Kenya’s economy.
  • Tanzania: 1.5 million fewer passengers resulting in a US$0.31billion revenue loss, risking 336,200 jobs and US$1.5 billion in contribution to Tanzania’s economy.
  • Mauritius: 3.5 million fewer passengers resulting in a US$0.54 billion revenue loss, risking 73,700 jobs and US$2 billion in contribution to Mauritius’ economy.
  • Mozambique: 1.4 million fewer passengers resulting in a US$0.13 billion revenue loss, risking 126,400 jobs and US$0.2 billion in contribution to Mozambique’s economy.
  • Ghana: 2.8 million fewer passengers resulting in a US$0.38 billion revenue loss, risking 284,300 jobs and US$1.6 billion in contribution to Ghana’s economy.
  • Senegal: 2.6 million fewer passengers resulting in a US$0.33 billion revenue loss, risking 156,200 jobs and US$0.64 billion in contribution to Senegal’s economy.
  • Cape Verde: 2.2 million fewer passengers resulting in a US$0.2 billion revenue loss, risking 46,700 jobs and US$0.48 billion in contribution to the country’s economy.

covid-19-iata-calls-for-relief-for-african-middle-eastern-airlinesIATA said to minimise the impact on jobs and the broader African economy it is vital that governments step up their efforts to aid the industry. Some governments in Africa have already taken direct action to support aviation, including:

  • Senegal announced US$128 million in relief for the Tourism and Air Transport sector.
  • Seychelles has waived all landing and parking fees for April to December 2020.
  • Cote d’Ivoire has waived its Tourism Tax for transit passengers.
  • South Africa is deferring payroll, income and carbon taxes across all industries, which will also benefit airlines domiciled in that country.

IATA said more help was needed and called on governments to provide  direct financial support, loans, loan guarantees and support for the corporate bond market as well as tax relief. IATA has also appealed to development banks and other sources of finance to support Africa’s air transport sectors which are now on the verge of collapse.

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Muhammad Ali Albakri, IATA’s regional vice president for Africa and the Middle East.

“Airlines in Africa are struggling for survival. Air Mauritius has entered voluntary administration, South African Airways and SA Express are in business rescue, other distressed carriers have placed staff on unpaid leave or signalled their intention to cut jobs,” said Muhammad Al Bakri, IATA’s regional vice president for Africa and the Middle East.  “More airlines will follow if urgent financial relief is not provided. The economic damage of a crippled industry extends far beyond the sector itself. Aviation in Africa supports 6.2 million jobs and US$56 billion in GDP. Sector failure is not an option, more governments need to step up.”

The association also reiterated what it has been saying since COVID-19 became a full-blown pandemic that the “industry will also need careful planning and coordination to ensure that airlines are ready when the pandemic is contained. IATA is scoping a comprehensive approach to re-starting the industry when governments and public health authorities allow. A series of virtual regional summits, bringing together governments and industry stakeholders are taking place this week. The main objectives will be to understand what is needs to be done to re-open closed borders, and agreeing to solutions that can be operationalised and scaled efficiently”.

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Airlines around the globe, have parked their planes as traffic remains grounded. (PHOTO: Shutterstock)

“As governments struggle to contain the COVID-19 pandemic, an economic catastrophe has unfolded. Re-starting aviation and opening borders will be critical to the eventual economic recovery. Airlines are eager to get back to business when and in a way that it is safe. But starting up will be complicated. We need to make sure that the system is ready, have a clear vision of what is needed for a safe travel experience, establish passenger confidence and find ways to restore demand. Cooperation and harmonisation across borders will be essential to restart aviation,” said Al Bakri.

Middle East

In the Middle East, which has become in recent years a powerhouse of the industry, IATA says the region’s airlines could lose US$24 billion of passenger revenue compared to 2019, US$5 billion more than was expected at the beginning of April. Job losses in aviation and related industries could grow to 1.2 million, which is half of the region’s 2.4 million aviation-related employment. The previous estimate of job losses was 0.9 million. Full-year 2020 traffic is expected to plummet by 51 percent compared to 2019 compared to the previous estimate of a 39 percent decline. GDP supported by aviation in the region could fall by US$66 billion from US$130 billion compared to a previous estimate of a US$51 billion decline.

Some of the impacts at national level include:

  • Saudi Arabia: 35 million fewer passengers resulting in a US$7.2 billion revenue loss, risking 287,500 jobs and US$17.9 billion in contribution to Saudi Arabia’s economy.
  • UAE: 31 million fewer passengers resulting in a US $6.8 billion revenue loss, risking 378,700 jobs and US$23.2 billion in contribution to UAE’s economy.
  • Egypt: 13 million fewer passengers resulting in a US$2.2 billion revenue loss, risking 279,800 jobs and US$3.3 billion in contribution to Egypt’s economy.
  • Morocco: 11 million fewer passengers resulting in a US$1.7 billion revenue loss, risking 499,000 jobs and US$4.9 billion in contribution to Morocco’s economy.
  • Iran: 8.7 million fewer passengers resulting in a US$1.8 billion revenue loss, risking 206,900 jobs and US$4.3 billion in contribution to Iran’s economy.
  • Kuwait: 5.2 million fewer passengers resulting in a US$1billion revenue loss, risking 24,100 jobs and US$1.6 billion in contribution to Kuwait’s economy.
  • Algeria: 5.8 million fewer passengers resulting in a US$0.8 billion revenue loss, risking 169,800 jobs and US$3.1 billion in contribution to Algeria’s economy.
  • Qatar: 4.8 million fewer passengers resulting in a US$1.7 billion revenue loss, risking 70,000 jobs and US$2.8 billion in contribution to Qatar’s economy.
  • Tunisia: 4.3 million fewer passengers resulting in a US$0.6 billion revenue loss, risking 92,700 jobs and US$1.2 billion in contribution to Tunisia’s economy.
  • Oman: 4.3 million fewer passengers resulting in a US$0.7 billion revenue loss, risking 51,500 jobs and US $1.7 billion in contribution to Oman’s economy.

“Airlines in the Middle East continue to be battered by the impact of COVID-19. Passenger traffic has all but ground to a halt and revenue streams have evaporated. No amount of cost cutting will save airlines from a liquidity crisis. The collapse of air transport will have devastating effects on countries’ economies and jobs. And in a region where aviation is a key pillar of many nations’ economies the effect will be much worse. Direct financial support is essential to maintain jobs and ensure airlines can remain viable businesses,” said IATA’s Al Bakri.

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Asian Aviation
Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.

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