Singapore – The International Air Transport Association (IATA) is urging Asia-Pacific states to take urgent action to provide financial support to their airline industry impacted by the COVID-19 crisis.
Major Asia-Pacific states could see passenger demand in 2020 reduced by between 34% to 44%. This is based on a scenario where severe restrictions on travel are lifted after 3 months, followed by gradual recovery. Cambodia (-34%), Vietnam (-34%) and the Philippines (-36%) will be on the lower end of the range, while Thailand (-40%), Pakistan (-40%), Republic of Korea (-40%) and Sri Lanka (-44%) will see the largest impact.
“Based on a scenario in which severe travel restrictions last for three months, the Asia-Pacific region as a whole will see passenger demand reduced by 37% this year, with a revenue loss of US$88 billion. 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,” said Conrad Clifford, IATA’s Regional Vice President, Asia-Pacific.
In its latest analysis, IATA expects airlines to post a net loss of US$39 billion during the second quarter ending 30 June 2020. 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$61 billion in the second quarter
Australia, New Zealand and Singapore have announced a substantial package of measures to support their aviation industry. “But others in the region, including India, Indonesia, Japan, Malaysia, the Philippines, Republic of Korea, Sri Lanka and Thailand, have yet to take decisive and effective action. Jobs as well as the GDP supported by the industry are at risk,” said Clifford. Details of the country impact can be found in the table below.
“Governments need to ensure that airlines have sufficient cash flow to tide them over this period, by providing direct financial support, facilitating loans, loan guarantees, and support for the corporate bond market. Taxes, levies, and airport and aeronautical charges for the industry should also be fully or partially waived. It is critical that these countries still have a viable aviation sector to support the economic recovery, connect manufacturing hubs and support tourism when the COVID-19 crisis is over. They need to act now – and urgently – before it is too late,” said Clifford.
Percentage change in passenger demand
Passenger demand impact (origin-destination volumes)
|Revenue impact (US$, billions)||Potential jobs impact||Potential GDP impact (US$, billions)|
|Papua New Guinea||-42%||-961,700||-201||-17,300||N/A|
|Republic of Korea||-40%||-45,142,000||-8,432||-287,700||-16,402|