Industry IATA: COVID-19 puts over half of 2020 passenger revenues at risk

The International Air Transport Association (IATA) has released an analysis, which sees more than half of the passenger revenue for 2020 to be at risk.

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According to the association, the COVID-19 crisis will see airline passenger revenues drop by US$ 314 billion in 2020. This would be a 55% decline compared to the previous year. In the last estimation, IATA expected revenues to drop by 44%.

These updated figures show the heavy impact the pandemic has on the commercial aviation. A significant deepening of the crisis can be noticed, and it is unclear if the pandemic could have an even bigger impact on the industry in the future.

Main reasons for the significant loss in passenger revenues are the severe domestic restrictions over the past three months, the restrictions on international travel beyond the initial three months and the overall worldwide impact.

Alexandre de Juniac, IATA’s Director General and CEO stated: “The industry’s outlook grows darker by the day. 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. We could see more than half of passenger revenues disappear. That would be a $314 billion hit. Several governments have stepped up with new or expanded financial relief measures, but the situation remains critical. Airlines could burn through $61 billion of cash reserves in the second quarter alone. That puts at risk 25 million jobs dependent on aviation. And without urgent relief, many airlines will not survive to lead the economic recovery.”

For the full year, IATA expects the passenger demand to be down by 48%. In these calculations, two main elements are significant: The overall economic developments and how fast the travel restrictions will be lifted in the coming months.

To rescue the aviation industry, IATA calls for governments to include aviation in stabilization packages. To ensure financial relief, options for governments would be direct financial support, loans or tax relief.

Struggling airlines like South African, Alitalia or Condor are hoping to get nationalized by their respective governments. This would be a good exit for the carriers and a chance to recover from this crisis.

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