Airlines around the world are facing a liquidity crisis that has already claimed the likes of Flybe and will impact ‘large parts’ of the industry if left unanswered.
That is according to The International Air Transport Association’s (IATA) director general, who has called on governments around the world to take immediate action to ease the financial pressures of the Covid-19 impact on airlines.
IATA estimated earlier this month that industry revenues could take a hit of up to $113 billion in a worst-case scenario event, but has since warned of far worse following developments such as the US travel ban on Europeans.
Addressing reporters on Tuesday, Alexandre de Juniac said that “the situation is worse than we thought it would be”.
He said while measures such as reducing charges for carriers and airports are helpful, they will not “save the airline industry from financial peril”.
Mr de Juniac suggested governments could offer direct financial support for carriers to compensate for reduced revenues.
He wants governments or central banks to support the corporate bond market with loans and loan guarantees either directly to airlines or to banks that may be reluctant to extend credit to airlines.
IATA’s request also outlines a need for tax relief for airlines.
“There is no one-size fits all solution” said Mr de Juniac. “So, we will be writing to governments around the world to alert them to the dire situation of the industry and get them moving—in the circumstances of their country.
“Time is of the essence. Governments cannot take a wait-and-see approach. We have seen how dramatically the situation has deteriorated globally in a very short time. They must act now and decisively.
“Some of you may wonder why, given the broad economic impact of this crisis, governments should focus on airlines. It is because connectivity is crucial. The world will get through this crisis. And when it does it will need a functioning air transport sector. Without financial relief that is not guaranteed.
“In normal times, airlines transport about 35% of global trade. And every job in air transport supports another 24 in the travel and tourism value chain—nearly 70 million jobs. Prioritising air transport—helping airlines financially survive through these dark times—will position the world for the eventual recovery.”