COVID-19 will damage passenger confidence in air travel, says IATA

COVID-19 looked like previous crises: a hit to traffic and revenue followed by a return to normal, even if there was uncertainty about the depth and duration of the hit.

The revenue reduction faced by airlines this year as a result of COVID-19 far exceeds the impact from previous crises. It has the dimensions of a world war.

Consequently, the International Air Transport Association (IATA) said a global recession is now coming in 2020/21 and this means that a recovery will take longer.

IATA’s Director-General, Alexandre de Juniac in a media briefing conducted via teleconference disclosed that recession will damage passenger confidence in third quarter.2020.

Not a few fell that even after recovery,’normal’  will not be the same as before. There are likely to be lasting impacts on demand for air travel. As a result of lockdowns, or near lockdowns, across the planet, people are fast learning new ways to live their lives, both at work and at leisure.

More than ever before, technology is now a more realistic and more widely used substitute instead of business travel by air.

Even after COVID-19 has passed, aviation may also face a residual loss of confidence from passengers over travel, for fear of close contact with others.

The IATA chief called for governments to work with the industry on confidence-boosting measures in the face of an anticipated slow recovery in demand for air travel.

“Passenger confidence will suffer a double whammy even after the pandemic is contained—hit by personal economic concerns in the face of a looming recession on top of lingering concerns about the safety of travel. Governments and industry must be quick and coordinated with confidence-boosting measures,” said de Juniac.

An IATA-commissioned survey of recent travelers found that 60 per cent anticipate a return to travel within one to two months of containment of the COVID-19 pandemic but 40 per cent indicate that they could wait six months or more.

Sixty-nine per cent indicated that they could delay a return to travel until their personal financial situation stabilizes.

He noted that early indications of this cautious return-to-travel behavior are seen in the domestic markets of China and Australia, where new coronavirus infection rates have fallen to very low levels:

In addition to confidence-building and stimulus measures, the IATA boss said the anticipated slow recovery also adds urgency to the need for emergency financial relief measures.

IATA estimates that some 25 million jobs in aviation and its related value-chains, including the tourism sector, are at risk in the current crisis. Passenger revenues are expected to be $314 billion below 2019 (-55 per cent) and airlines will burn through about $61 billion in liquidity in the second quarter alone as demand plummets by 80 per cent or more.

“This is an emergency. Airlines around the world are struggling to survive. Virgin Australia which entered voluntary administration demonstrates that this risk is not theoretical. Governments will need financially viable airlines to lead the economic recovery.

“Many of them won’t be around to do that if they have run out of cash. The number of governments recognizing that relief measures are needed is growing. But the crisis is also deepening. We thank the governments that have committed to provide the industry a lifeline and look forward to quick implementation. For the others, each day matters. Millions of jobs are at stake and relief cannot come fast enough,” said de Juniac.

Wole Shadare