IATA sees airlines taking deeper hit on revenue

MANILA, Philippines — The International Air Transport Association (IATA) expects airlines to take a deeper revenue hit than what was earlier expected as a result of the coronavirus 2019 or COVID-19 pandemic.

In a report, IATA said that industry passenger revenues may plummet by $252 billion this year, which is 44 percent below last year’s outcome.

IATA said the updated estimate is a result of the severity of travel restrictions and the expected global recession.

“This is in a scenario in which severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year,” it said.

For airlines in Asia Pacific alone, estimated full year passenger demand is expected to decline by 37 percent compared to 2019, resulting in a passenger revenue drop of about $88 billion.

In its previous analysis released earlier this month, IATA placed the potential global revenue losses of airlines for their passenger business at a massive $63 billion to $113 billion this year due to the contagion.

IATA, however, said such potential global revenue losses were made before countries around the world introduced sweeping travel restrictions that largely eliminated the international air travel market.

IATA director general and CEO Alexandre de Juniac said the airline industry is already facing its “gravest crisis.”

“Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates,” he said.

“But without immediate government relief measures, there will not be an industry left standing. Airlines need $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,” De Juniac said.

In the Philippines, the local airline industry is seeking assistance from the government in the form of credit lines as well as assurance of support for loans with private banks.

Air Carriers Association of the Philippines Inc. executive director and vice chairman Roberto Lim told The STAR last week that the group wants government-owned and controlled corporations to extend credit line or support to the airline industry and for the government to assure private banks so that they continue credit lines, renew expiring ones, and grant forbearance in payment deadlines.