Global airlines industry headed for worst year in history

RwandAir, Qatar Airways and Ethiopian Airlines planes at Kigali International Airport. / Photo: Sam Ngendahimana.

The International Air Transport Association (IATA) has said that airlines across the world are expected to lose $84.3 billion this year due to the coronavirus pandemic, calling it the ‘worst year’ in the history of aviation.

“Financially, 2020 will go down as the worst year in the history of aviation. On average, every day of this year will add $230 million to industry losses. In total that’s a loss of $84.3billion,” said Alexandre de Juniac, IATA’s Director General and CEO, as he released the financial outlook for the air transport sector in a statement.

 

That will erase more than a decade of growth, returning the industry to 2006 levels.

 

The global aviation body said air travellers’ demand has faded as international borders closed and countries went under lockdown to prevent the spread of the virus.

 

“This is the biggest driver of industry losses,” Juniac said.

IATA, which has 290 member airlines that handle around 82 per cent of the total global air traffic, said revenues will fall 50 per cent to $419 billion in 2020 from $838 billion in 2019.

“In 2021, losses are expected to be cut to $15.8 billion as revenues rise to $598 billion,” Alexandre de Juniac added.

The Director General said that as per the IATA’s estimates, 2.2 billion passengers will travel through flights this year and the airlines will lose $37.54 per passenger.

“That’s why government financial relief was and remains crucial as airlines burn through cash,” he said.

Slow recovery

While there are signs air travel is starting to pick up, the recovery has been slow, complicated by economic downturn and lockdown measures.

Some companies have responded to this by grounding fleets, scaling back service and cutting thousands of jobs.

For instance, RwandAir, the national carrier, which had previously suspended its commercial passenger flights, has recently increased its footprint in cargo transport.

In May, the airline secured a deal with Tanzania that will see them transport cargo from Mwanza airport to Brussels, Belgium, while it also resumed ferrying commercial freight from the Chinese city of Guangzhou to Kigali.

In a bid to prop up the airlines, the airline’s economy, the Rwandan government said that it will increase funding to RwandAir to Rwf145.1 billion in the 2020/21 fiscal year, up from Rwf121.8 billion this financial year.

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

According to Juniac, “Provided there is not a second and more damaging wave of COVID-19, the worst of the collapse in traffic is likely behind us.

A key to the recovery is the universal implementation of the re-start measures agreed through the International Civil Aviation Organization (ICAO) to keep passengers and crew safe.”

eashimwe@newtimesrwanda.com

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