Middle East carriers need government support to cope with coronavirus impact, Iata says

Industry lobby group working with Lebanon's government to ensure foreign carriers' revenue continues to be repatriated

The International Air Transport Association called for a common set of rules to help facilitate the restart of global air travel. Reuters

The International Air Transport Association urged Middle East governments to support their airlines through relief measures to help mitigate the impact from the coronavirus outbreak that has triggered flight cancellations and dented travel demand. The industry lobby group also said it is working with Lebanon to ensure that foreign airlines serving the country, which is facing its worst economic crisis in three decades, can continue to repatriate revenue.

Middle East carriers could face nearly 50 per cent revenue exposure, up from three per cent currently, if the deadly virus spreads further into the rest of Asia-Pacific, as they connect Asia to Europe via their hubs, Muhammad Ali Albakri, Iata's vice president for Africa and Middle East, said at a press conference on Monday. Under that potential scenario, "significant additional revenue" is at risk to Middle East carriers if travel restrictions spread further into Asia and China's economic slowdown impacts travel demand.

"Airlines will need support to get over this challenging period … Relief in costs will help maintain vital air connectivity for the region," he said. "The region depends on air connectivity, and support from governments will really help the airlines to go through this difficult period … we urge governments to act quickly, support is needed to help the airlines work through this crisis."

Middle East governments introduced tougher measures, including suspending flights and restricting travel, to contain the coronavirus outbreak. Saudi Arabia temporarily barred entry for visitors holding tourism visas from countries worst affected by the virus, including China, Italy and South Korea. Regional carriers, many of which are state-owned, may be able to recoup some of their losses through a reduction of government-controlled operating costs such as taxes, airport charges and overflight fees.

Iata sees air ticket sales to, from and within the region dropping within the coming weeks, Mr Albakri said.

The drop in prices of jet fuel, which makes up about 30 per cent of an airline's operating costs, could help offset some of the losses, he said.

"Of course, any reduction in operating cost at difficult times such as this would help the airlines," he said.

Jet fuel prices declined in January to $76.20 per barrel, down from $80.10 a barrel in December as fears of a demand downturn weakened prices.

Mr Albakri also said Iata is working with Lebanon's central bank, travel agencies association and flagship Lebanese carrier Middle East Airlines to make to make sure airline operations continue as normal in the country.

Iata is working with Lebanon's central bank to ensure foreign carriers can continue to repatriate revenue, which is the "biggest challenge" for airlines serving the country, he said.

"It is difficult but it's still flowing, the distribution system is still working, airlines are still selling tickets and still flying in and out of Lebanon," he said.

"The country understands the vital role of aviation, the government understands how vital air connectivity is to Lebanon especially in this difficult political time and they're doing everything in their power to make sure that that is not disrupted," he said.

Lebanon, which has been rocked by months of anti-corruption protests, is facing a liquidity crunch that has forced banks to limit individuals' access to their bank deposits and constrained their ability to transfer funds abroad.