IATA Says Slow Recovery Requires Confidence-Building Measures

April 24, 2020

The International Air Transport Association (IATA) called on the government to take measures to increase confidence with the aviation industry when air travel demand is expected to recover slowly.

“Even after curbing the pandemic, passenger confidence will suffer a double blow-in the face of continued recession and worries about travel safety, personal economic worries have hit people’s confidence. The government and industry must act quickly and take action Measures to increase confidence are coordinated, “said Alexandre de Juniac, Director General and CEO of IATA.

A recent survey conducted by the International Air Transport Association commissioned by travelers found that:

60% want to return to travel within one to two months after controlling the COVID-19 pandemic, but 40% say they can wait six months or more
69% said they may delay their return trip until their personal financial situation stabilizes
Early signs of this cautious return to travel behavior can be seen in the domestic markets of China and Australia, where the rate of new coronavirus infections has fallen to very low levels:
China: When China ’s new COVID-19 infection rate fell to single digits and quickly became zero, domestic demand began to recover (measured by the percentage of new infections as a percentage of the 7-day moving average in total COVID-19 cases) . There was an early recovery from mid-February to the first week of March, but the number of domestic flights remained stable at more than 40% of the level before COVID-19. According to reports, due to the low load factor of these flights, actual demand is expected to be greatly reduced. China accounts for about 24% of all domestic passengers.

Australia: Even if the new infection rate drops to single digits, thus triggering an initial recovery in the Chinese domestic market, domestic demand continues to deteriorate. In fact, even if the new infection is close to zero, there is still no sign of recovery (the total number of domestic flights is 10% of the level before COVID-19). Australia accounts for 3% of all domestic passengers.

Domestic market behavior is a key indicator because the recovery after the pandemic is expected to be driven by domestic travel, followed by regional travel, then intercontinental travel, as the government gradually lifts restrictions.

“In some economies, the spread of COVID-19 has slowed to the point where the government plans to lift the most severe element of social isolation restrictions. But it seems unlikely to rebound immediately from the catastrophic decline in passenger demand. People still want to travel But they told us that they want to clarify the economic situation and may wait at least a few months after “everything is cleared” before they can return to the sky. As countries lift restrictions, confidence-building measures are needed to restart travel And stimulating the economy are crucial.

The International Air Transport Association will hold regional summits with government and industry partners this week, beginning plans to eventually restart the air transport industry. “Passenger business is stopped by the government’s unilateral action to stop the spread of the virus. However, the industry restart must be based on trust and collaboration. It must be guided by the best science we have available. Time is life. We must start Establish a framework for a global approach that will give people the confidence to travel again. Of course, this will require economic stimulus measures to cope with the effects of the recession. ”

Remedy
In addition to confidence-building and stimulus measures, the expected slow recovery has also increased the urgency of the demand for emergency financial relief measures. The International Air Transport Association estimates that in the current crisis, about 25 million jobs in aviation and its related value chains (including tourism) are at risk. Passenger revenue is expected to decrease by US $ 314 billion (-55%) from 2019. In the second quarter alone, airlines will consume approximately US $ 61 billion in liquidity due to a drop in demand of 80% or more.

Some governments have strengthened. Examples of relief measures last week include:

Colombia adds tax relief for air tickets, aviation fuel and tourism to the already comprehensive package of relief measures
Hong Kong provided another 2 billion Hong Kong dollars in relief, including pre-purchasing 500,000 air tickets from Hong Kong airlines, injecting liquidity into the airlines.
Senegal announces $ 128 million in relief for the tourism and air transport sector
Seychelles waived all landing and parking fees from April 2020 to December 2020.
The 41 states regulated by the European Union and their air navigation service providers (ANSP) postponed the 1.1 billion euro air services fee from February to May until November until 2021. Last week, another 13 states and air navigation service providers also delayed terminal costs, totaling 190 million euros, over the same period.