Thursday, June 25, 2020

IATA predicts airlines will lose $84 billion in 2020, but agency offers a roadmap for recovery

Not too long ago, the airline industry was preparing for a surge in passengers, with the International Air Transport Association (IATA) forecasting 8.2 billion air travelers in 2037.

But in April, air travel declined 98% from last year as countries closed their borders in efforts to stem the coronavirus pandemic.

“We think airlines are going to probably lose an unprecedented $84 billion in 2020,” Brian Pearce, chief economist for IATA, said in an interview with CNBC. “We’re really only just starting to see countries negotiating bilateral openings of markets. For example, the Trans-Tasman bubble between Australia and New Zealand, China and Singapore, as well as China and Korea.”

Still, Pearce said he expects a recovery in the second half of 2020.

While international travel will likely remain volatile for now, countries like China, the U.S. and Indonesia have resumed domestic air travel.

“It will be enough to kickstart the airline industry in some countries,” Pearce said. “For many airlines, they do depend on international air travel.”
Government aid will be important in ensuring the continuity of airlines, said Keith Mason, head of the Centre for Air Transport Management at Cranfield University.

“We’re going to see a consolidation in the market where airlines that are fully independent are struggling to survive, are going to go out of business,” he said in a CNBC interview.

Some airlines are already displaying significant disruption, including Flybe in the U.K., Virgin Australia and Trans States Airlines in the U.S.

Governments are increasingly offering financial assistance to keep ailing carriers afloat, including the U.S., Australia and Taiwan. IATA predicted that a total of $200 billion in global government support may be needed.
25/06/20 Nessa Anwar/CNBC

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