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Airline revenues could fall by more than N$1.8 trillion due to Covid-19

2020-03-16  Staff Reporter

Airline revenues could fall by more than N$1.8 trillion due to Covid-19
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Global airlines have been among the hardest-hit by the Covid-19 outbreak as global air travel demand has basically collapsed since the outbreak of the virus, even before the declaration of a pandemic by the World Health Organisation. 

The latest figures from the International Air Transport Association (IATA) estimates that airline revenues could fall by 19% or some N$1.8 trillion (US$113 billion) if the virus is not contained. 
This estimate was made before the announcement of the restrictions to travellers inbound to the United States from the Schengen area. 

And the aviation industry will be crucial for the global economy to recover as quickly as possible once Covid-19 is brought under control. 

“Airlines are implementing emergency measures under severe cashflow conditions. Along with relaxing slot rules, governments must also consider other forms of emergency relief,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe.

Meanwhile, IATA welcomed the announcement by the European Commission (EC) granting the temporary suspension until June 2020 of the 80-20 “use it or lose it” rule for airport slots.  
IATA says the decision reflects the unprecedented situation facing the airline industry but expressed concern that granting the suspension only until June is the very minimum the industry needs, and a decision on a full suspension until October will be needed within the next month to allow airlines to plan their schedules.

Owing to the requirement to continue to operate an airport slot for at least 80% of the time, airlines have been unable to respond by adjusting their capacity. 

The suspension of the slot use rules until June will allow airlines to begin putting in place measures to cope with the unprecedented fall in traffic, but it is a shorter period than airlines had requested. Airlines say they need the suspension to be extended to cover the whole season (to October), as other regulators worldwide have already agreed. The EC will therefore need to review the extension request by 15 April.

“Airlines are in crisis. The collapse in demand is unprecedented. And airlines are struggling to match capacity to the fast-changing situation. The Commission’s decision to suspend slot use rules until June means that airlines can make these critical decisions immediately – without worrying about the impact on future availability of slots. 

This is much needed and most welcome. However, given all the uncertainties, it is disappointing that the decision does not cover the full season,” said Schvartzman. 

The Commission’s decision will benefit airlines, airports and passengers in numerous ways including: Allowing airlines to plan schedules and redeploy aircraft and crew to where demand is highest; improve economic and environmental sustainability by ensuring that flights for which there is no demand can be cancelled; enable airlines more flexibility to plan for the recovery phase and re-introduce capacity where and when needed; and ensure that the industry can return to normal as quickly as possible once the crisis is over. 

2020-03-16  Staff Reporter

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