COVID-19 impact on Asia-Pacific aviation worsens

IATA has issued this report:

The latest estimates from the International Air Transport Association (IATA) indicate a worsening of the country impact from the COVID-19 crisis in the Asia Pacific region.

On April 14, 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% 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 24 March estimate), and a 50% fall in passenger demand in 2020 compared to 2019 (-37% in 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.

“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. We have seen the first airline casualty in the region. 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,” said Conrad Clifford, IATA’s Regional Vice President, Asia-Pacific. He identified India, Indonesia, Japan, Malaysia, the Philippines, Republic of 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
  • tax relief

“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,” said Clifford.

“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.

Details of the latest country impact are given below.

COUNTRY PERCENTAGE CHANGE IN PASSENGER DEMAND (2020 VS 2019) PASSENGER DEMAND IMPACT (ORIGIN-DESTINATION VOLUMES – 2020 VS 2019) REVENUE IMPACT (US$, MILLIONS – 2020 VS 2019) POTENTIAL JOBS IMPACT 
Australia
-51%
-50,510,000
-14,255
-362,100
Bangladesh
-48%
-5,541,000
-1,073
-61,900
Brunei Darussalam
-50%
-605,000
-114
-8,500
Cambodia
-45%
-5,390,000
-866
-770,000
Fiji
-51%
-1,158,000
-305
-65,100
India
-47%
-89,764,000
-11,221
-2,932,900
Indonesia
-49%
-59,756,000
-8,225
-2,069,000
Japan
-50%
-93,862,000
-22,625
-585,900
Laos
-51%
-1,618,000
-220
-23,800
Malaysia
51%
-33,513,000
-4,236
-220,500
Maldives
-51%
-2,747,000
-639
-37,200
Myanmar
-48%
-4,377,000
-691
-245,200
Nepal
-51%
-3,422,000
-522
-229,900
New Zealand
-50%
-12,865,000
-3,388
-170,100
Pakistan
-52%
-9,866,000
-1,829
-259,400
Philippines
-47%
-28,852,000
-4,481
-548,300
Republic of Korea
-52%
-59,219,000
-10,755
-371,200
Singapore
-48%
-23,897,000
-6,732
-169,000
Sri Lanka
-58%
-4,049,000
-715
-408,200
Thailand
-52%
-55,562,000
-8,289
-2,167,000
Vietnam
-45%
-31,902,000
-4,347
-989,500

For Europe, IATA issued this report:

The International Air Transport Association (IATA) released further evidence of the risk to jobs from the mounting financial crisis threatening European airlines, and called for urgent government action to preserve air services.

IATA’s analysis shows that the potential revenue loss by European carriers in 2020 has grown to $89 billion and passenger demand (measured in Revenue Passenger Kilometers) is projected to be 55% below 2019 levels. This is an increase over the previous estimates (released 24 March) of $76 billion and 46% respectively. Overall, we estimate that the present 90% collapse in air traffic puts around 6.7 million jobs at risk and could lead to a negative GDP impact of $452 billion across Europe. This equates to an additional 1.1 million jobs and $74 billion in GDP over the March estimates of 5.6 million jobs and $378 billion.

The increasing risk to jobs and GDP is due to a greater impact than previously expected from the air travel restrictions introduced as a result of the COVID-19 pandemic. IATA’s new analysis is 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 travel.

Some of the impacts at national level include:

  • United Kingdom: 140 million fewer passengers resulting in a $26.1bn revenue loss, risking almost 661,200 jobs and around $50.3bn in contribution to the UK economy.
  • Spain :114 million fewer passengers resulting in a $15.5bn revenue loss, risking 901,300 jobs and $59.4bn in contribution to Spain’s economy.
  • Germany: 103 million fewer passengers resulting in a $17.9bn revenue loss, risking 483,600 jobs and $34bn in contribution to Germany’s economy.
  • Italy: 83 million fewer passengers resulting in a $11.5bn revenue loss, risking 310,400 jobs and $21.1bn in contribution to Italy’s economy.
  • France: 80 million fewer passengers resulting in a $14.3bn revenue loss, risking 392,500 jobs and $35.2bn in contribution to France’s economy.

It is essential that governments move quickly to minimize this economic damage. Among the first priorities should be direct financial support, loans and tax relief to airlines. Regulatory relief is also crucial, especially a temporary amendment to EU261 to give greater flexibility on the terms of repayments for cancelled flights.

“Every job created in the aviation industry supports another 24 jobs in the wider economy. Unfortunately, that means that when aviation jobs disappear, the impact is magnified across the economy. Our latest impact assessment shows that the number of jobs at risk has increased to 6.7 million across Europe. As airlines face an unprecedented liquidity crisis, we desperately need European government financial and regulatory support,“ said Rafael Schvartzman, IATA’s Regional Vice President for Europe.

Restarting air travel

 While airlines fight for survival, the industry is looking to plan for a restart of air connectivity once restrictions begin to be lifted. A number of requirements to ensure a successful restart have been identified:

  • Confidence-building measures will be needed to encourage a return to travel. This will mean governments providing economic stimulus, and coordinated measures to ensure that travel is safe
  • Governments should lean on the industry’s operational expertise to ensure efficient results
  • Global standards with mutual recognition will be essential for successful implementation
  • Any temporary measures introduced by governments should be exercised with a clear exit strategy.

“The world will rely on airlines and air connectivity to restore the global economy. A successful restart of the industry will be crucial. To help with that, IATA is hosting a series of regional summits to bring governments and key stakeholders together, to maximize the chances of an orderly restart. Harmonization and coordination of measures will be vital. And as always, we will be led by the science in terms of what can be implemented effectively,” said Schvartzman.