The International Air Transport Association (IATA) called on governments to add market stimulation measures to the support they are giving to keep aviation financially viable.
Such measures would encourage travel while systematic testing protocols enable a safe re-opening of borders.
Since the onset of the Covid-19 pandemic, governments have helped airlines survive the crisis with approximately $173 billion in various forms of financial support.
More support will be needed in the form of financial stimulus. Many of the support packages are running out, but industry losses continue to mount. Airline losses are now forecast to top $118 billion this year and nearly $39 billion in 2021. The industry is expected to continue burning through cash at a rate of almost $7 billion per month in the first half of 2021.
Financial support must come in ways that do not further inflate debt which has risen by 51.4 per cent in the crisis to $651 billion. To put this into perspective, total industry revenue in 2021 is expected to be $459 billion.
“Financially viable airlines will be needed to lead the economic recovery from the depths of the Covid-19 crisis. Government support of $173 billion has helped many survive. With potential to safely re-open borders and revive travel with testing, governments will need to add measures that stimulate demand. Such targeted initiatives will help generate revenues, avoid adding debt to airlines, and immediately generate economic activity across the value chain,” said Alexandre de Juniac, IATA’s Director General and CEO.
IATA identified five proven ways that governments can help stimulate the air travel market while avoiding adding more debt to already highly leveraged airline balance sheets:
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