COVID-19: IATA warns APAC aviation in danger as global halt to passenger traffic continues

There will be more ‘casualties’ like Virgin Australia if governments don’t step in to help and regional situation is worsening

Thousands of planes around the world have been grounded due to the COVID-19 pandemic. (PHOTO: Shutterstock)

The main trade association for the global airline industry, the International Air Transport Association (IATA), said the health of the aviation industry in the Asia-Pacific region was “worsening” as the COVID-19 pandemic continues to ground commercial passenger aviation.

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 situation is deteriorating. Airlines are in survival mode. They face a liquidity crisis with a US$61 billion cash burn in the second quarter,” said Conrad Clifford, IATA’s regional vice president for Asia-Pacific. “We have seen the first airline casualty in the region,” he added, referring to the recent bankruptcy filing of Virgin Australia. “There will be more casualties if governments do not step in urgently to ensure airlines have sufficient cash flow to tide them over this period.”

Much like IATA, the main trade group representing Asia-Pacific’s airports, Airports Council International (ACI) Asia-Pacific, said preliminary traffic data from 18 airports in major aviation markets in Asia-Pacific and the Middle East showed year-on-year passenger traffic fell by 95 percent by the middle of April as the world’s aviation business continues to crater due to the global spread of the COVID-19 pandemic. ACI said there were some encouraging “initial signals of recovery” in China and South Korea and that airports globally have made “significant adjustments to operations to manage the impact” of the virus and have made “cautious preparations for resumption of services”, but there is no clear indication when aviation will be able to resume as nations around the world continue to keep their borders closed as a way to combat the spread of COVID-19.

IATA’s Clifford said  countries including India, Indonesia, Japan, Malaysia, the Philippines, South  Korea, Sri Lanka and Thailand as priority countries that need to take action. IATA is calling for a combination of direct financial support, loans, loan guarantees and support for the corporate bond market as well as tax relief, all measures IATA also called on governments in the Middle East and Africa to take.

(Chart courtesy of IATA)

On 14 April 2020, IATA released updated analysis showing that the COVID-19 crisis will see global airline passenger revenues drop by US$314 billion in 2020, a 55 percent decline compared to 2019. Airlines in Asia Pacific will see the largest revenue drop of US$113 billion in 2020 compared to 2019 (-US$88 billion in a 24 March estimate), and a 50 percent fall in passenger demand in 2020 compared to 2019 (-37 percent in a 24 March estimate). 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, IATA said.

“Providing support for airlines has a broader economic implication. Jobs across many sectors will be impacted if airlines do not survive the COVID-19 crisis. Every airline job supports another 24 in the travel and tourism value chain. In Asia-Pacific, 11.2 million jobs are at risk, including those that are dependent on the aviation industry, such as travel and tourism,” Clifford said.

“Airlines continue to perform an important role currently with the transport of essential goods, including medical supplies, and the repatriation of thousands of people stranded around the world by travel restrictions. And after the COVID-19 pandemic is contained, governments will need airlines to support the economic recovery, connect manufacturing hubs and support tourism. That’s why they need to act now – and urgently – before it is too late,” said Clifford.

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