INTERNATIONAL Air Transport Association (IATA) said airlines could see the start of an upturn in domestic demand in the third quarter of 2020 amid the expected global recession, but international markets would take longer to resume.
In a recent statement, IATA said it expects full-year passenger demand, both domestic and international, to fall by 48% from last year.
“One factor driving this fall is the anticipated worldwide recession. Global GDP (gross domestic product) is expected to shrink 6% in Q2 alone, three times worse than at the height of the Global Financial Crisis,” it said.
IATA, which represents some 290 airlines comprising 82% of global air traffic, said the second quarter’s reduced economic activity would result in the third quarter’s air passenger demand falling by 8%.
It added that domestic markets “could still see the start of an upturn in demand beginning in the third quarter in a first stage of lifting travel restrictions.”
But it would be slower for international markets to resume, IATA said, noting that governments are likely to keep travel restrictions longer.
Travel restrictions would also worsen the impact of the recession on travel demand; the most serious impact is expected to be in the second quarter, according to IATA.
In a recent analysis, IATA estimated airline passenger revenue losses from the COVID-19 crisis to reach $314 billion this year, as severe domestic restrictions could continue for three months and some international travel restrictions could be extended beyond the initial three months.
IATA Director-General and Chief Executive Officer said: “The industry’s outlook grows darker by the day. The scale of the crisis makes a sharp V-shaped recovery unlikely. Realistically, it will be a U-shaped recovery with domestic travel coming back faster than the international market. We could see more than half of passenger revenues disappear. That would be a $314 billion hit.”
“Several governments have stepped up with new or expanded financial relief measures but the situation remains critical. Airlines could burn through $61 billion of cash reserves in the second quarter alone. That puts at risk 25 million jobs dependent on aviation. And without urgent relief, many airlines will not survive to lead the economic recovery.”
In the Philippines, local carriers including Philippine Airlines, Inc. (PAL), Cebu Air, Inc. (Cebu Pacific), Philippines AirAsia, Inc., Air Philippines Corp. (PAL Express), and Cebgo, Inc. have recently pleaded for government help, as the COVID-19 pandemic’s “catastrophic impact” threatens their survival.
The local airlines temporarily shut down their passenger operations after Luzon was placed under enhanced community quarantine (ECQ). Over 30,000 flights were canceled, affecting nearly five million passengers.
Earlier, the Australia-based Center for Asia Pacific Aviation said airlines in Asia-Pacific countries, including the Philippines, will be the most badly affected by the COVID-19 crisis.
On Friday last week, low-cost carrier AirAsia announced the resumption of its domestic flights, beginning with Malaysia on April 29, followed by Thailand and the Philippines on May 1, India on May 4, and Indonesia on May 7. The flight schedules are subject to authority approval, AirAsia said. — Arjay L. Balinbin
