Air travel is in crisis

 

Alexandre de Juniac of IATA explains: “We have never seen a downturn this deep before. In our latest scenario, full year passenger revenues plummet 55% compared to 2019, while traffic falls 48%. In other words, half our business disappears. That’s catastrophic. That impact is then amplified throughout the economy. If airlines lose one job, another 24 disappear somewhere in the value chain. 25 million jobs are at risk. That is why we continue to ask governments to make the viability of airlines a priority. Governments in Belgium, Sweden and USA have responded with relief measures. This industry will run out of cash soon, so support of any kind will be a lifeline.” 

IATA has stated the sector wants:

  • Direct financial aid
  • Loans, loan guarantees and support for the corporate bond market by governments or central banks
  • Tax relief

There has been some positive news in Europe where a few governments have seen progress against the disease improve to the point where they are beginning to re-open their economies. But the easing of lockdown measures does not include a re-start for aviation. Plus, individual country decisions cannot facilitate the restoration of international air services when other markets remain closed.

China and South Korea, countries which have been successful in controlling the disease within their own borders, are now doubling down on international travel restrictions because they do not want to risk importing a second outbreak.

Governments re-opening their economies must have confidence that the disease is also under control in the countries they do business with, otherwise they are unlikely to make travel easy or convenient.  

Passengers will also need to have their confidence restored. They will not return to travel until they feel personally safe in doing so. They will need to have confidence that their travel will not be interrupted by the disease or by quarantine restrictions, and they must have confidence in the economic situation.

Successive unilateral actions by states can shut down aviation but unilateral actions cannot restart aviation. IATA says that governments must work with each other and together with the industry.

The big debate is about whether, as the global airline industry will have to work hard to regain the trust of the passengers, this will lead to higher or lower initial ticket prices.

Many airlines, such as in the Middle East, had financial problems even before the pandemic, and a price war may push some airlines into bankruptcy.

The future of medical tourism is closely intertwined with the future of the global airline industry, and fewer airlines servicing destinations will have an impact on international patient business.

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