IATA calls on government lifelines for airlines as US ban bites carriers

IATA boss warns of ‘enormous cash pressure’ on airlines as Germany and UK look to bear the brunt of a ban on travel to the US
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Iata, Donald Trump, Us travel ban, Coronavirus

Governments should look “at all possible means” to help the airline industry weather the coronavirus crisis, according The International Air Transport Association’s (IATA) CEO Alexandre de Juniac.

Donald Trump’s travel ban on people coming to the US from Europe has now come into force and has caused some airlines to drop the final few routes helping them maintain some form of income.

The ban has been extended to include the UK and Ireland and over the weekend British Airways sent a memo to staff titled ‘The Survival of British Airways’, warning of job cuts.

As airlines deal with the fallout from the latest blow to their dwindling revenue streams, IATA predicts that carriers could faces a combined loss in sales of up to $113 billion because of the collapse in demand for air travel.

Flybe in the UK has already folded because of the drop in demand and experts think more airlines, including larger ones, will cease to operate before the crisis is out.

Mr de Juniac wants governments to explore extending lines of credit and reducing infrastructure costs and taxes. He has called on policy makers to “respond quickly to the financial frailty of airlines” in the wake of the US travel ban.

The European Commission has already suspended the ‘use it or lose it’ slots rule, meaning airlines will not lose their valuable take-off and landing slots if they fail to use them more than 80% of the time.

But the rule has only been suspended until June rather than for the entire season until October, which Mr de Juniac said was “disappointing”.

Rafael Schvartzman, IATA’s regional vice president for Europe, said that along with relaxing slot rules, governments must also consider “other forms of emergency relief”.

Mr de Juniac said: “Governments must also recognise that airlines, employing some 2.7 million people, are under extreme financial and operational pressures. They need support.”

In 2019, there were around 200,000 flights scheduled between the US and the Schengen Area, equivalent to around 550 flights a day. IATA is concerned the economic fallout from the travel ban will be severe.

“Governments must impose the measures they consider necessary to contain the virus,” said Mr de Juniac.

“And they must be fully prepared to provide support to buffer the economic dislocation that this will cause. In normal times, air transport is a catalyst for economic growth and development.

“Suspending travel on such a broad scale will create negative consequences across the economy. Governments must recognise this and be ready to support.”

IATA’s estimation of $113 billion damage to airline revenues did not take into account the measures imposed by the US and the group thinks the travel ban could add to sum. The total value of the US-Schengen market in 2019 was $20.6 billion. The markets facing the heaviest impact are US-Germany ($4 billion), US-France ($3.5 billion) and US-Italy ($2.9 billion).

“This will create enormous cash-flow pressures for airlines,” said Mr de Juniac.

“We have already seen Flybe go under. And this latest blow could push others in the same direction. Airlines will need emergency measures to get through this crisis. Governments should be looking at all possible means to assist the industry through these extreme circumstances.

“Extending lines of credit, reducing infrastructure costs, lightening the tax burden are all measures that governments will need to explore. Air transport is vital, but without a lifeline from governments we will have a sectoral financial crisis piled on top of the public health emergency.”

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