Losses to the aviation industry, despite the gradual resumption of flights, could reach $ 77 billion in the second half of 2020, the International Air Transport Association (IATA) said.
Thus, the global aviation business will generate a monthly loss of $ 13 billion, or $ 300,000 per minute. At the current rate of recovery in the air transportation market, the industry remains unprofitable in 2021, generating an average of $ 5 billion to $ 6 billion in losses per month. The Association supposes that the industry will not be able to earn “plus” until 2022.
Thus, airlines will not be able to continue operating without substantial support from states, including financial ones.
“The crisis was deeper and longer than any of us could have imagined. And the initial support programs are ending. Today we must sound the alarm again. If these support programs are not replaced or renewed, the consequences for the already affected industry will be dire, ” said Alexandre de Juniac, CEO and Chief Executive Officer of IATA. “Historically, cash raised during the height of the summer season has helped airlines during the leaner winter months. Unfortunately, the disastrous spring and summer of this year did not soften the situation. In fact, the airlines burned cash throughout the entire period. And since governments do not have a timetable for opening borders without quarantines that are effectively killing the tourism industry, we cannot rely on the end-of-year holiday season to bring us some extra cash to hold out until spring. ”
IATA noted that to date, governments around the world have allocated a total of about $ 160 billion to support carriers. This includes direct financial aid, payroll subsidies, tax breaks, and fuel subsidies.
In the second quarter of 2020, they took extensive optimization measures: sent thousands of planes to long-term parking, cut routes, and also cut any non-critical expenses. In addition, hundreds of thousands of employees were reduced or sent on unpaid leave.
On average, this reduced costs by 50%, but even with such measures, the industry lost $ 51 billion as revenues fell almost 80% compared to the same period last year. The fall in income was observed throughout the summer months.
“We need government support for the entire sector as the crisis has spread to the entire value chain, including airports and air navigation infrastructure, which rely on pre-crisis traffic levels to support their operations. Raising rates for users of the system to make up for lost revenue in related industries will set in motion a vicious and relentless cycle of further pressure on prices and downsizing. This will prolong the crisis of 10% of global economic activity related to travel and tourism, ”added de Juniac.
At the same time, demand will remain low, and consumers will not seek to increase their travel expenses. According to a recent IATA survey, about two-thirds of travelers have already indicated that they will postpone travel until the overall economy or their personal financial situation stabilizes. An increase in tariffs in such conditions will inevitably lead to a further reduction in those wishing to go on a trip, and as a result, will be reflected in the future on all aviation.
According to the latest data from Air Transport Action Group, a sharp downturn in the global aviation industry this year and a slow pace of recovery could result in the loss of 4.8 million jobs across the aviation sector. This, in turn, will pose a threat to 46 million potential jobs in related industries and the risk of a decrease in economic activity in the amount of $ 1.8 trillion.
Only important. For the pros only.