Global airlines will lose $314 billion (Dh1.15 trillion) in passenger revenue this year, a 55 per cent drop from 2019, as the rapid spread of the coronavirus and ensuing travel bans continue to hurt the industry, the International Air Transport Association said on Tuesday.
The latest assessment is much higher than the organisation's previous estimate of a $252bn loss just three weeks ago on March 24.
“The industry’s outlook grows darker by the day,” said Alexandre de Juniac, Iata ’s director general and chief executive in a statement.
“The scale of the crisis makes a sharp, V-shaped recovery unlikely. Realistically, it will be a U-shaped recovery with domestic travel coming back faster than the international market. We could see more than half of passenger revenues disappear.”
Passenger demand globally is forecast to plunge 48 per cent year-on-year in 2020 due to travel restrictions imposed by governments to contain the spread of the disease, as well as weaker economic growth.
The International Monetary Fund on Tuesday said the global economy is heading for its worst decline since the Great Depression of the 1930s, forecasting a 3 per cent decline for global GDP this year, from a previous estimate of a 3.3 per cent increase.
“The world is heading for a recession. The economic shock of the Covid-19 crisis is expected to be at its most severe in the second quarter when GDP is expected to shrink by 6 per cent,” Iata said. “The impact of reduced economic activity in the second quarter alone would result in an 8 per cent fall in passenger demand in the third quarter.”
As of early April, the number of flights globally was down 80 per cent compared to 2019, largely due to severe travel restrictions imposed by governments to fight the spread of the virus, according to Iata.
Airlines worldwide are suspending most or all of their passenger flights, grounding jets and axing jobs in efforts to preserve cash.
Iata urged governments to step up efforts to help by extending direct financial support to the industry, as well as granting loans and tax relief.
“Airlines could burn through $61bn of cash reserves in the second quarter alone. That puts at risk 25 million jobs dependent on aviation. And without urgent relief, many airlines will not survive to lead the economic recovery,” Mr de Juniac said.
Covid-19 has infected more than 1.9 million people worldwide and killed more than 120,000, according to Johns Hopkins University, which is tracking global data on the outbreak. More than 453,289 people have also recovered.