IATA Reminds Governments in Latin America & Caribbean on Urgency of Relief to the Industry in Face of COVID-19 Crisis

5 months ago 207

Translation:

IATA insta a los gobiernos de América Latina y El Caribe a considerar de manera urgente medidas que ayuden a la industria de la aviación ante la crisis del COVID-19 (pdf)

Support Needed for Cargo Operations and Repatriation Flights

Miami - The International Air Transport Association (IATA) is reminding governments across Latin America and the Caribbean to consider urgent relief measures for airlines, as they continue to confront the COVID-19 crisis.

“The necessary response to contain this public health emergency has in turn created an economic crisis. While we fully understand the need for the measures instigated to fight the virus, governments need to mitigate the effects. A failure of the airline sector risks connectivity, prolongs the pain for employees across the travel value chain and hampers the socio-economic recovery,” said Peter Cerdá, IATA’s Regional Vice President for the Americas.

This week IATA released an updated analysis showing that the COVID-19 crisis will see airline passenger revenues drop by US$314 billion in 2020, a 55% decline compared to 2019. On 24 March IATA had estimated US$252 billion in lost revenues (-44% vs. 2019), based on a scenario with severe travel restrictions lasting three months.

The updated figures reflect a significant deepening of the crisis since then, and are based on the following parameters:

Severe domestic restrictions lasting three months Some restrictions on international travel extending beyond the initial three months Worldwide severe impact, including Africa and Latin America (which had a small presence of the disease and were expected to be less impacted in the March analysis).

Full-year passenger demand (domestic and international) is expected to be down 48% compared to 2019.

Region of airline registration

RPKs 2020
(vs 2019 year-on-year change)

Passenger revenue
$ billion 2020 vs 2019 levels
Asia Pacific -50% -113
North America -36% -64
Europe -55% -89
Middle East -51% -24
Africa -51% -6
Latin America -49% -18
Industry -48% -314

For airlines based in Latin America and the Caribbean this translates into a drop in passenger revenues of US$18 billion for 2020 (the 24 March estimate was US$15 billion).

Breaking the latest estimate down by country shows the following effects on passenger revenues per market (all passenger traffic to, from and within a market) and corresponding direct and indirect job losses per country:

 countryRevenue change (US$ bn, 2020 vs 2019)Revenue YoY change (%, 2020 vs 2019)Change in GDP Contribution (in US$ bn) - impact on AVIATION INDUSTRYChange in jobs - impact on AVIATION INDUSTRYChange in GDP contribution
(in US$ bn) - impact on WIDER ECONOMY
Change in jobs - impact on WIDER ECONOMY
Argentina -2.914 -57% -1.448 -17,589 N/A N/A
Brazil -9.268 -48% -2.032 -73,703 -5.643 -270,678
Chile -2.208 -48% -1.010 -13,703 -1.766 -56,995
Colombia -2.211 -47% -0.481 -32,789 -3.101 -253,451
Costa Rica -0.654 -44% -0.309 -4,182 -2.178 -63,341
Mexico -6.414 -45% -4.765 -4.765 -10.935 -537,807
Panama -0.812 -74% -0.812 -14,699 -4.632 -152,143
Peru -1.565 -48% -0.306 -15,740 -1.810

-125,975

With this scenario in mind, IATA is asking governments to consider:

Direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19. Loans, loan guarantees and supportfor the corporate bond market by the Government or Central Banks: The corporate bond market is a vital source of finance, but the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies.  Tax relief:Rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other government-imposed levies.

“The impact on airlines in the region for this crisis continues to be brutal. Passenger traffic has ground to a halt and revenue streams have dried up. No amount of cost cutting will save airlines from a liquidity crisis that is imminent and severe. This will have detrimental effects on countries’ economies and jobs. Governments must act fast,” said Cerdá.

IATA is also renewing its call for the coordinated approach among governments to keep air cargo flowing. Delays in permit approvals, quarantine measures for air cargo crew and not enough support on the ground continue to hamper the movement of cargo flights carrying vital medical supplies and other necessities.

“The suspension of passenger flights has led to the loss in available cargo capacity. This is especially critical across Latin America and the Caribbean where, in many cases, no alternative means of transport exists. Airlines are providing as much capacity as they can, but governments need to step up and ensure that vital supply lines remain open and efficient, and that there is adequate infrastructure and support available in the air and on the ground,” said Cerdá.

There are still too many examples of delays in getting charter permits issued, a lack of exemptions on COVID-19 testing for air cargo crew, and inadequate ground infrastructure to/from and within airport environments. Air cargo needs to move efficiently throughout the entire supply chain to be effective. We urge governments to:

Cut the paperwork for charter operations Exempt cargo crew from quarantine rules that apply to the general population Ensure adequate staffing and facilities to process cargo efficiently Mutually recognize agreed global standards (health certificates, licenses, etc.) Ensure alternate airports are available even if passenger flights are not operating

Furthermore, IATA reminded governments of the need to cooperate with the industry in the organization of repatriation flights. As borders were closed and flights suspended, many people were stranded outside their home country or country of residence. Airlines have performed more than 2,500 repatriation flights to and from the region helping some 400,000 stranded citizens. While the requests for such flights have fallen, there is still the occasional need for these.

“As an industry we can take pride in the way airlines responded to governments’ requests to repatriate citizens. Many of these flights have been a logistical challenge and we have seen airlines serve destinations in Latin America and the Caribbean which they had never flown to before. Collaboration across the entire travel value chain was essential and we hope that we can count on governments in the region to support such flights as and when needed,” said Cerdá.

Aviation across Latin America and the Caribbean:

Supports a total 7.2 million jobs Aannually handles 4.1 million tonnes of air cargo Provides connectivity to 385 cities across the region Links the region to 160 cities in other parts of the world Contributes US$167 billion to the region's GDP

Country

Aviation’s contribution to the country’s GDP in %

Aviation’s contribution to the country’s GDP in US$ bn

Employment supported by Aviation in number of jobs

Foreign Tourist Spending in US$ bn

Value of exports (all means of transport) in US$ bn

Argentina

2.1

12.0

329,000

5.1

71.3

Belize

33.0

0.591

44,200

0.422

1.0

Brazil

1.1

18.8

839,000

5.8

258

Chile

2.8

7

191,000

3.4

79.5

Colombia

2.7

7.5

600,000

4.8

45.7

Costa Rica

9.0

5.0

155,000

3.8

20.0

Dominican Republic

12.5

9.0

482,000

7.2

18.9

Ecuador

3.2

3.2

207,000

1.7

21.4

El Salvador

4.0

1.1

116,000

0.872

8.9

Guatemala

1.0

1.1

75,900

1.6

14.0

Honduras

3.0

0.744

100,000

0.700

9.9

Mexico

3.05

37.4

1,400,000

21.3

435.6

Nicaragua

6.0

0.867

130,000

0.841

5.7

Panama

14.0

8.5

238,000

4.5

26.0

Peru

2.6

5

341,000

3.7

51.3

Source: IATA / Oxford Economics / Full country reports can be viewed and downloaded here.

Download the full presentation(pdf)

For more information, please contact:

Corporate Communications – Latin America & Caribbean

Tel: +1-438-258-3155 or +1-514-240-4746

Email: ruedigerm@iata.org

Notes for Editors:

IATA (International Air Transport Association) represents some 290 airlines comprising 82% of global air traffic. You can follow us at twitter.com/iata for announcements, policy positions, and other useful industry information. All media information on COVID-19 can be found here.
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