Covid-19 will cost airlines $157 billion, says the IATA

The global airline sector will lose a total of $157 billion this year and in 2021, according to the International Air Transport Association (IATA), as shutdowns and measures caused by the second wave of the novel coronavirus pandemic are expected to continue.

In June, the IATA had forecast $100 billion in losses for the two-year period, however, the association expects a $118.5 billion deficit for the aviation sector this year alone, and a further $38.7 billion for 2021.

Despite several announcements over some successful and highly effective Covid-19 vaccine findings around the world, most countries reimposed measures to slow down the spread of the pandemic - the deadly virus has already claimed more than 1.4 million lives around the world.

“The positive impact it will have on the economy and air traffic will not happen massively before mid-2021,” IATA Director General, Alexandre de Juniac, told Reuters.

The IATA estimates passenger numbers will drop to 1.8 billion for this year- they were 4.5 billion in 2019. However, the numbers will recover only partially to 2.8 billion next year, which is quite far from the pre-pandemic period. 

Furthermore, passenger revenue for the sector is expected to have plunged 69 percent to $191 billion for 2020.

IATA Chief Economist, Brian Pearce, said: “That's by far the biggest shock the industry has experienced in the post-World War Two years.” 

The main global body for aviation forecasts considerable reopenings of borders by the middle of 2021, thanks to a combination of Covid-19 testing and vaccine deployment.

The IATA re-emphasised its call for state authorities to replace travel-stifling quarantine regimes with widespread testing programmes.

“We are seeing states progressively coming to listen to us,” de Juniac said, citing testing initiatives underway in France, Germany, Italy, Britain, the United States and Singapore.

Some will require vaccination requirements. For example, Australian national carrier Qantas may demand that passengers are vaccinated for long-haul travel. This could not work everywhere, de Juniac said.

“It would prevent people who are refusing (the vaccine) from travelling,” the IATA chief said. “Systematic testing is even more critical to reopen borders than the vaccine.”

While passenger numbers are decreasing, the air cargo revenue will be expected to rise 15 percent to $117.7 billion this year, despite an 11.6 percent decline in volume to 54.2 million tonnes, the IATA said.

Some $173 billion in government aid has left recipients with debts that threaten to jeopardise future investment, it warned, and more bankruptcies are likely.

The average airline now has enough liquidity to survive another 8.5 months, while some have just weeks, Pearce said. “I think we will get consolidation through some airline failures.”