The International Air Transport Association (IATA) has further increased its estimate of the potential lost revenue for airlines from the spread of coronavirus (covid-19) to as high as $252 billion.
Due to the severe travel restrictions imposed and the expected global recession, IATA now estimates that airline passenger revenues could plummet $252 billion in 2020 or 44 per cent below 2019’s figure.
This $250 billion figure is for a scenario whereby severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year.
IATA’s previous analysis of up to a $113 billion revenue loss was made on 5 March 2020, before countries around the world introduced travel restrictions due to the coronavirus pandemic.
IATA is now calling for governments that have not yet provided financial relief to airlines to follow suit “before more damage is done”.
“The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates,” said IATA’s director general and CEO, Alexandre de Juniac.
“But without immediate government relief measures, there will not be an industry left standing. 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,”
The latest analysis is based on the scenario whereby severe travel restrictions are lifted after three months. The recovery in travel demand later this year is weakened by the impact of global recession on jobs and confidence.
Full year passenger demand (revenue passenger kilometers or RPKs) declines 38 per cent compared to 2019. Industry capacity (available seat kilometre or ASKs) in domestic and international markets declines 65 per cent during the second quarter ended 30 June compared to a year-ago period, but in this scenario recovers to a 10 per cent decline in the fourth quarter.
Comparing 2020 to 2019, IATA now estimates a $76 billion drop in passenger revenue in Europe, a $88 billion drop in Asia Pacific, a $15 billion drop in Latin America, a $19 billion drop in the Middle East, a $50 billion drop in North America and a $4 billion drop in Africa, equating to a total industry loss of $252 billion.
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