The International Air Transport Association (Iata) reported on April 14 that its latest analysis of the impact of the Covid-19 pandemic on airlines’ passenger revenues is that it will be even more severe than previously forecast. On March 24, Iata predicted that airline passenger revenues this year would be $252-billion, or 44%, down on the figure for 2019. Now the association estimates that the fall will be $314-billion or 55%.
“The industry’s outlook grows darker by the day,” said Iata director-general and CEO Alexandre de Juniac. “The scale of the crisis makes a sharp V-shaped recovery unlikely. Realistically, it will be a U-shaped recovery with domestic travel coming back faster than the international market.”
The latest Iata forecast assumes that there will be severe limitations on domestic air travel lasting for three months, coupled with the extension of some limitations on international air travel beyond three months, plus the severe impact of the pandemic around the entire globe, including Africa and Latin America. These travel restrictions, as of early April, cut the number of flights, worldwide, by 80% in comparison to last year.
In addition, there will be a global recession, with the worst of the economic shock being in the current (second) quarter of this year. Iata expects global gross domestic product to fall by 6% this year, in comparison to the 2% contraction experienced at the peak of the last global financial crisis.
“Airlines could burn through $61-billion of cash reserves in the second quarter alone,” he highlighted. “That puts at risk 25-million jobs dependent on aviation. And without urgent relief, many airlines will not survive to lead the economic recovery."
“Financial relief for airlines today should be a critical policy measure for governments,” he urged. “Supporting airlines will keep vital supply chains working through the crisis. Every airline job saved will keep 24 more people employed. And it will give airlines a fighting chance of being viable businesses that are ready to lead the recovery by connecting economies when the pandemic is contained. If airlines are not ready, the economic pain of Covid-19 will be unnecessarily prolonged.”