The International Air Transport Association (IATA) has reiterated its call to Asia-Pacific states to take immediate action of providing financial stimulus packages to their airline industry impacted by the COVID-19 crisis.
Major Asia-Pacific states are yet to act, and could see passenger demand in 2020 reduced between 34 – 44%, with suffering revenue loss of $88 billion.
In terms of passenger demand reduction, IATA said the Philippines, along with Cambodia and Vietnam, would be on the lower end of the range, while Thailand, Pakistan, Korea, and Sri Lanka would see the largest impact in 2020.
IATA’s Regional Vice President for Asia-Pacific Conrad Clifford said, “While each country will see varying impact on passenger demand, the net result is the same – their airlines are fighting for survival, they are facing a liquidity crisis, and they will need financial relief urgently to sustain their businesses through this volatile situation.”
The global airline body’s country-specific projection reports 36 per cent drop in passenger demand in India and a reduction of 6.85 crore in passenger volume at origin destinations. This could result in revenue losses to the tune of $ 8,838 million which could impact the national GDP in losses of $ 12,709 million.
The Indian aviation sector, according to IATA latest analysis, could suffer potential job losses of 22.47 lakh personnel, which was the highest among 27 Asia-Pacific countries. The list includes Australia, South Korea, Indonesia, Japan, Malaysia, Singapore, Thailand, and Vietnam among top aviation markets.
In comparison to India, Japan is projected to suffer a passenger demand drop of 38 per cent resulting in revenue losses to the tune of $17,765 million and potential job losses of 4.48 lakh personnel. IATA said Sri Lanka would face a 44 per cent reduction in passenger demand, revenue losses of $ 562 million and job losses to the tune of 3.13 lakh. Pakistan was projected to suffer a 40 per cent decline in passenger demand, revenue losses of up to $ 1,438 and job losses to the tune of 1.98 lakh.
Australia, New Zealand, and Singapore have announced a substantial package of measures to support their aviation industry.
“But others in the region including India, Indonesia, Japan, Malaysia, the Philippines, Republic of Korea, Sri Lanka and Thailand, have yet to take decisive and effective action. Jobs as well as the GDP supported by the industry are at risk,” Clifford states.
Earlier this week, IATA said, “Airlines cannot cut costs fast enough to stay ahead of the impact of this crisis. We are looking at a devastating net loss of US$39 billion in the second quarter. The impact of that on cash burn will be amplified by a US$35 billion liability for potential ticket refunds. Without relief, the industry’s cash position could deteriorate by US$61 billion in the second quarter.”
Governments need to ensure that airlines have sufficient cash flow to tide them over this period. “They need to provide direct financial support, facilitate loans, loan guarantees, and support for the corporate bond market. Taxes, levies, and airport and aeronautical charges for the industry should also be fully or partially waived. It is critical that these countries still have a viable aviation sector to support the economic recovery, connect manufacturing hubs and support tourism when the COVID-19 crisis is over. They need to act now – and urgently – before it is too late,” Clifford stressed.