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Worst year for aviation, global airlines to lose $84 bn in 2020

By Aneesh Phadnis
June 10, 2020 15:01 IST
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In India, domestic airlines have not secured any relief from the government and are reporting 50-55 per cent loads as domestic air travel resumed on May 25 after two-month suspension.

Aviation

Illustration: Dominic Xavier/Rediff.com

The International Air Transport Association (IATA) has projected $84.3-billion loss for global airlines in 2020 as travel bans and visa restrictions are set to halve international passenger traffic.

Financially, 2020 will go down as the worst year in the history of aviation, IATA’s director general Alexandre de Juniac said as he released the financial outlook for the air transport sector on Tuesday.

 

Based on passenger estimates, airlines will lose $37.54 per passenger, it said.

A sharp fall in demand and revenue has forced airlines to slash costs, and governments are stepping in to infuse funds and keep airlines afloat.

On Tuesday, Cathay Pacific said the Hong Kong government will take 6 per cent stake in the airline as a part of a $5-billion bailout plan.

On the other hand, news reports on Tuesday said Emirates is laying off hundreds of pilots and cabin crew to curb expenses.

In India, domestic airlines have not secured any relief from the government and are reporting 50-55 per cent loads as domestic air travel resumed on May 25 after two-month suspension.

Near-term travel outlook remains uncertain, but 48 per cent year-on-year fall in fuel price offers a silver lining.

IATA said passenger demand has evaporated as international borders closed and countries locked down to prevent the spread of the virus.

This is the biggest driver of industry losses, it said.

At the low point in April, global air travel was roughly 95 per cent below 2019 levels.

The global airline body said passenger numbers will roughly halve to 2.25 billion, approximately equal to 2006 levels.

Capacity, however, cannot be adjusted quickly enough with a 40.4 per cent decline expected for the year.

India is yet to take a decision on opening up international traffic.

Civil Aviation Minister Hardeep Singh Puri has said the decision to resume regular international operations will be taken as soon as countries ease restrictions on entry of foreign nationals.

Destination countries have to be ready to allow incoming flights.

IATA said passenger revenues are expected to fall to $241 billion (down from $612 billion in 2019).

“This is greater than the fall in demand, reflecting an expected 18 per cent fall in passenger yields as airlines try to encourage people to fly again through price stimulation,” it said.

With open borders and rising demand in 2021, the industry is expected to cut its losses to $15.8 billion.

“Airlines will still be financially fragile in 2021.

"Passenger revenues will be more than one-third smaller than in 2019.

"And airlines are expected to lose about $5 for every passenger carried.

"The cut in losses will come from reopened borders leading to increased volumes of travellers.

"Strong cargo operations and comparatively low fuel prices will also give the industry a boost.

"Competition among airlines will no doubt be even more intense.

"That will translate into strong incentives for travellers to take to the skies again,” said de Juniac.

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Aneesh Phadnis in Mumbai
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