Aviation Transport

How to drive air transport recovery, by IATA

The International Air Transport Association (IATA) has called on governments across the globe to devise market stimulation measures to keep the aviation sector financially viable.

Part of the measures, it said would encourage travel while systematic testing protocols enable a safe re-opening of borders.

According to IATA, since the onset of the COVID-19 pandemic, governments have helped airlines survive the crisis with approximately $173 billion in various forms of financial support. The global body said more support will be needed in the form of financial stimulus as previous  support packages were running out culminating in industry losses which continue to mount.

Global airlines losses are now forecast to top $118 billion this year and nearly $39 billion next year.

IATA said the industry is expected to continue burning cash at a rate of almost $7 billion per month in the first half of next year.

Its Director-General and Chief Executive Officer, Alexandre de Juniac said: “Financial support must come in ways that do not further inflate debt which has risen by 51.4per cent in the crisis to $651 billion. To put this into perspective, total industry revenue in 2021 is expected to be $459 billion.

“Financially viable airlines will be needed to lead the economic recovery from the depths of the COVID-19 crisis. Government support of $173 billion has helped many survive. With potential to safely re-open borders and revive travel with testing, governments will need to add measures that stimulate demand. Such targeted initiatives will help generate revenues, avoid adding debt to airlines, and immediately generate economic activity across the value chain.”

IATA, however, identified five ways that governments could help stimulate the air travel market while avoiding adding more debt to already badly affected airline balance sheets.

The global body identified the measures to include temporary   waivers or suspensions of government charges, taxes and fees to airlines, which is expected to  reduce flight costs and lower travel costs for passengers.

Others, IATA said include route  subsidies for flights to local/regional destinations to support connectivity for rural communities and business as well as financial  incentives in the form of rewards for operating flights, or seats flown, which can support airlines while load factors or yields are too low.

“Advance ticket purchases that governments can use for future trips or distribute to the traveling public in the form of vouchers to support travel and tourism. Passenger travel subsidies in the form of vouchers for passengers or as a percentage cash-back on overall travel costs. In normal times, aviation supports more than 87 million jobs and $3.5 trillion in GDP contribution worldwide.

“But 46 million jobs and $1.8 trillion in economic activity supported by aviation have been put at serious risk by the dramatic fall in travel demand. The potential to re-start travel with testing should be a turning point. And it creates the opportunity for government measures to stimulate demand, taking economic advantage from aviation’s role as an economic catalyst.

“A robust economic recovery needs people to start traveling again. Every job in aviation supports a further 29 jobs, demonstrating the broad impact that re-connecting the world will have. There are many good ideas out there. Any government stands to benefit by including proven stimulus measures into their economic recovery plans. When people travel, economies prosper and grow .”

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