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Africa|Aviation|Financial|transport|Operations
Africa|Aviation|Financial|transport|Operations
africa|aviation|financial|transport|operations

Iata forecasts much worse Covid-19 impact on airlines than previously predicted

3rd April 2020

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

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The latest analysis of the impact of the Covid-19 pandemic on the revenues of airlines worldwide, undertaken by their global representative body, the International Air Transport Association (Iata), has indicated that the impact will be much worse than previously believed. Iata has now estimated that this impact will be more than twice as bad as indicated in its previous forecast.

On March 5, Iata issued a report which stated that the world’s airlines would likely suffer a revenue loss of up to $113-million due to the pandemic. The latest forecast, issued on March 24, has indicated that airline revenue losses could reach $252-billion. This figure would be 44% lower than the revenues accrued by the airline industry last year.

“The airline industry faces its gravest crisis,” highlighted Iata director-general and CEO Alexandre de Juniac. “Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates.” The new estimates assume that the current severe air travel restrictions remain in effect for up to three months, with a subsequent gradual economic recovery thereafter.

All regions would suffer severe declines, but these falls will vary from region to region. In terms of revenue passenger kilometres (RPKs, which measure the real demand for air traffic) the worst-hit region was predicted to be Europe, with a collapse of 46%, translating into revenue losses for this year (compared with last year) of $76-billion. The region that would have the least decline in RPKs (‘only’ 27%) was North America, but that would still translate into revenue losses of $50-billion.

Africa is expected to suffer a 32% decline in RPKs, involving revenue losses of $4-billion. Latin America would see a 41% collapse in RPKs, resulting in revenues falling by $15-billion. Asia-Pacific would be hit by a 37% drop in RPKs and a $88-billion fall in revenues, with the respective figures for the Middle East being 39% and $19-billion. For the global industry, RPKs are expected to decline by 38% with the above-mentioned predicted revenue losses of $252-billion.

“But without immediate government relief measures, there will not be an industry left standing,” he warned. “Airlines need $200-billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit.”

A number of governments around the world were already providing financial support for airlines, Iata has reported. In a press release, it cited Australia, Brazil, China, Hong Kong, New Zealand, Norway, Qatar, Singapore, and Sweden and Denmark (acting jointly) as providing direct and indirect financial support for airlines.

“This shows that States around the globe recognise the critical role that aviation plays in the modern world,” said De Juniac. “But many others have still to act to preserve the important role of this sector. Airlines are an economic and employment engine. This is demonstrated even as passenger operations shrink, as airlines continue to deliver cargo that is keeping the economy going and getting relief supplies where they are needed most.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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