Middle Eastern carriers will benefit from relatively rapid vaccination rates on home markets, the International Air Transport Association (Iata) said as it reduced by more than half its estimate of the net losses faced by the regional aviation sector in 2021.
The global airlines’ body said the region’s carriers would incur losses of 13.8 per cent of revenues as it warned that the across the world airlines could be facing combined losses of $47.7 billion in 2021 due to Covid-19.
Iata’s estimate of the losses for the Middle Eastern carriers for this year has been reduced from 28.9 per cent of revenues estimated in 2020, the third smallest regional loss.
The global aviation body said al the global industry loss forecast for 2021 is a huge improvement on 2020’s eye-watering $126 billion sum, governments will still need to provide wage support to airlines as a result.
Former British Airways owner IAG boss Willie Walsh, who now heads Iata, said “the crisis is longer and deeper than anyone could have expected. Losses will be reduced from 2020, but the pain of the crisis increases.”
The loss estimate came as Iata also reduced its forecast for passenger numbers and distance flown in 2021 to 43 per cent of 2019’s levels, down from a previous estimate of 51 per cent.
In an earlier report, Iata had warned that several airlines in the Middle East faced heightened risk of bankruptcy despite the industry receiving $4.8 billion in government aid in 2020. Most of this support was distributed through direct cash injections.
Kamil Al Awadhi, Iata regional vice-president for Africa and the Middle East noted that government relief for airlines avoided massive failures that would jeopardize a restart, “but with no clear timeline to recovery the situation is far from resolved.”
In 2020, Middle Eastern carriers lost $7.1 billion as they recorded a 72 per cent drop in passenger demand compared to 66 per cent globally and a 63 per cent drop in capacity compared to 57 per cent globally.
According to estimate, airlines in the Middle East lost $68.47 for every passenger they flew in 2020 compared to a loss globally of $66.04.
However, air cargo was a bright spot for Middle East carriers, cargo volumes only dropped 10 per cent while that was not enough to offset the losses from the passenger side of the business.
Connectivity in the region fell by 60 per cent at the low point of the crisis. Before the crisis there were 1060 unique international routes at the low point of the crisis there was 440. And the density of those connections has become much thinner. Job losses could grow to 1.7 million in the Middle East in aviation and related industries, Iata said.
Iata has called on governments in the Middle East to develop restart plans to safely re-link their citizens, businesses and economies to global markets when the Covid-19 epidemiological situation permits. The global body also called for regional coordination to ensure that the plans can be efficiently implemented and urged governments to remain vigilant about the industry’s financial situation.
“Re-establishing air connectivity will energize the economic recovery from Covid-19. With millions of jobs at risk from the prolonged shutdown, not a day should be lost once the epidemiological situation enables a re-opening. Restarting safely after a year or more in lockdown will need careful preparations,” it said.
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