Emergency support urged for Asia Pacific Airlines
Richmond Mercurio (The Philippine Star) - March 27, 2020 - 12:00am

MANILA, Philippines — Asia-Pacific countries including the Philippines are being urged to provide emergency support to airlines as many of these carriers may not be able to take off once the coronavirus disease 2019 or COVID-19 crisis is over without the urgent relief.

The International Air Transport Association (IATA) said it has written to the heads of government of 18 states in Asia-Pacific, including the Philippines, to appeal for emergency support to airlines as they fight for survival due to the dramatic loss of air travel demand due to the COVID-19 outbreak.

“Airlines are fighting for survival in every corner of the world. Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business,” IATA director general and chief executive officer Alexandre de Juniac said.

“For airlines, it’s apocalypse now. And there is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry,” he said.

De Juniac warned that failure of these governments to act now would make the crisis longer and more painful, with some 2.7 million airline jobs at risk.

“We are 100 percent behind governments in supporting measures to slow the spread of COVID-19. But we need them to understand that without urgent relief, many airlines will not be around to lead the recovery stage,” he said.

IATA is proposing a number of options for governments to consider, including direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19.

It said governments or central banks could also provide loans, loan guarantees, and support for the corporate bond market which is a vital source of finance.

IATA said the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies.

The governments could also provide tax relief in the form of rebates on payroll taxes paid to date or an extension of payment terms for the rest of the year, along with a temporary waiver of ticket taxes and other government-imposed levies.

“A growing number of governments in Asia-Pacific, including Australia, New Zealand, Singapore, have announced financial relief packages for the airline industry and we are grateful to them for the assistance rendered during this dark period for the airline industry,” IATA regional vice president for Asia Pacific Conrad Clifford said.

“But we need more governments to come on board to support the airline industry serving their markets,” he said.

De Juniac, who described the current situation as the airline industry’s gravest crisis, said the problem has worsened dramatically in a matter of days.

IATA estimates that the COVID-19 crisis would reduce passenger demand in Asia Pacific by 37 percent this year and translate to a revenue loss of $88 billion.

The estimates are based on a scenario where severe restrictions on travel are lifted after three months, followed by gradual recovery.

Air Carriers Association of the Philippines Inc. (ACAP) executive director and vice chairman Roberto Lim told The STAR last week that the local airlines are also seeking a much-needed assistance from the government in the form of credit lines as well as assurance of support for loans with private banks.

Lim said ACAP has called on government-owned and controlled corporations to extend credit line or support to the airline industry, as well as on the government to assure private banks so that they continue to extend new credit lines, renew expiring ones, and grant forbearance in payment deadlines.

Local carriers Philippine Airlines (PAL), Cebu Pacific, and AirAsia Philippines have been severely affected by the COVID-19 outbreak.

These carriers have already suspended their domestic and international flights until April 14 in line with travel restrictions and collapse in travel demand.

PAL and Cebu Pacific, for their part, have taken more drastic measures to cut costs, which included laying off 300 ground-based administrative and management personnel and over 150 cabin crew members, respectively.

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