Sunday, November 01, 2020

To Avoid A Major Crash, Our Airlines Need A Helping Hand

The Coronavirus pandemic that first emerged in December 2019 in the city of Wuhan, China, has spread to 219 countries, areas or territories, infected 454,28,731 and killed 11,85,721 people as of October 31, 2020, according to the World Health Organization (WHO). And with no confirmed antidote so far, it continues to spread, with some regions already experiencing a second wave.

The pandemic has hit consumer demand, ravaged production lines, played havoc with transportation and logistics, and practically put a brake on the basic drivers of the economy. Countries like India have been badly hit, the with GDP plummeting to below 23 per cent.

One of the worst-hit sectors is the aviation industry. The International Air Transport Association (IATA), a trade association and representative of the airline industry, estimates that global revenues generated by the airline sector are likely to be reduced by half from US$ 838 billion in 2019 to US$ 419 billion in 2020.

Major airlines are staring at bankruptcy or looking toward the government support to survive. Some may have to ultimately close down. The most recent examples of airlines that filed for bankruptcy or ceased to exist include the UK low-cost carrier Flybe (March 2020), Virgin Australia (April 2020), Chile’s LATAM (May 2020), Colombia’s national airline Avianca (May 2020), the German airlines SunExpress Deutschland (June 2020), and the Austrian airline LEVEL Europe (June 2020). The severe financial crunch due to the Covid-19 pandemic has proved to be the death knell for them. The prolonged suspension of operations due to Covid-19 outbreak has brought the aviation sector to the brink of a complete collapse. IATA estimates that globally, airline sector may need a bailout package worth US$ 200 billion to sail through the crisis.

01/11/20 Mohammed Naved Khan,  Matloob Hasan/Outlook

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