Aviation bankruptcies a flight of fancy thanks to governments' help

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on March 18, 2021
A recent poll of those who have travelled since June shows that 90 per cent believe that airlines have done a good job in enforcing health safety rules.

Leaderships have provided vital cash and other relief measures to preserve sector during pandemic: Iata chief

The global aviation sector would have witnessed huge bankruptcies if governments across the world had not stepped up with over $225 billions of relief to cash-strapped airlines, the International Air Transport Association (Iata) said on Thursday as it described the past 12-month period as “nothing less than catastrophic” for the airline industry.

Alexandre de Juniac, Iata’s director-general and CEO, said a viable air transport sector would be critical to energise the recovery.

“Governments realise that and have provided vital cash and other relief measures to preserve the sector during the pandemic — with direct cash infusions and through measures such as tax relief and loan guarantees. In total, it is valued at over $225 billion,” he said.

The outgoing Iata chief said the global airline industry suffered a 66 per cent plunge in passenger demand compared to pre-crisis levels during the pandemic-stricken one year. It is now back to 1998 levels in passenger demand. “And in terms of passenger revenue, we ended 2020 at 1993 levels.”

Demand fell through the floor. The scale of the decline completely dwarfed what happened in 9.11, Sars or the global financial crisis, de Juniac said as he announced the postponement of the 77th Iata annual general meeting and World Air Transport Summit to October 3-5, 2021, in Boston. The event was originally scheduled for June 27-29.

Iata has a membership of 290 airlines accounting for a combined 82 per cent of global air traffic.

The drastic decline in travel demand has caused a de-connecting of the world. “Before the crisis, we had almost 30,000 unique international routes between airports. Now we have about 12,000. And the density of those connections has become much thinner,’ said the Iata chief. “Before the crisis, the average route was served by about 43 flights per month. Now it’s around 20 flights per month — not even daily. The massive loss of connectivity depressed economies worldwide — essentially shutting down international tourism, conventions, exhibitions, and the like along with flying.”

“We believe that it is vital to do all we can to meet as an industry face to face. Doing so will affirm that airlines can safely connect the world, demonstrate our industry’s resilience, and confirm the inestimable value of in-person meetings, facilitated by aviation,” said de Juniac.

The Iata head said over the pandemic hit 12 months, domestic travel did better. The number of routes being served is basically unchanged.

“Cargo, of course, was a different story. It returned to 2019 levels by January. What is being shipped has changed with the crisis. But people still rely on fast and efficient delivery of goods. And that is certainly true with the critical role that air cargo is playing when delivering vaccines.”

He said the airline industry has done its homework to prepare for the eventual restart of operations. A recent poll of people who have travelled since June last year shows that 90 per cent believe that the airlines have done a good job in enforcing health safety rules. And 86 per cent reported that they felt safe while onboard.

“As we showed last week, about 57 per cent of travellers are ready to fly within a few months of the pandemic being contained,” said de Juniac.

— issacjohn@khaleejtimes.com


Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.

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