KUALA LUMPUR, 8 April 2020:
Some 25 million jobs are at risk of disappearing due to plummeting demand for air travel amid the Covid-19 crisis, with the bulk of job losses amounting to 11.2 million are in the Asia Pacific, warned the International Air Transport Association (IATA).
Airlines are calling on governments to provide immediate financial aid to help airlines to remain viable businesses able to lead the recovery when the pandemic is contained.
Specifically, IATA calls for direct financial support, loans, loan guarantees and support for the corporate bond market and tax relief.
“There are no words to adequately describe the devastating impact of Covid-19 on the airline industry,” said IATA director general and chief executive officer Alexandre de Juniac in a statement.
“And the economic pain will be shared by 25 million people who work in jobs dependent upon airlines. Airlines must be viable businesses so that they can lead the recovery when the pandemic is contained. A lifeline to the airlines now is critical.”
Alongside vital financial relief, the industry will also need careful planning and coordination to ensure airlines are ready when the pandemic is contained.
“We have never shuttered the industry on this scale before. Consequently, we have no experience in starting it up. It will be complicated. At the practical level, we will need contingencies for licences and certifications that have expired.”
The industry have to adapt operations and processes to avoid reinfections via imported cases.
“And we must find a predictable and efficient approach to managing travel restrictions which need to be lifted before we can get back to work. These are just some of the major tasks that are ahead of us. And to be successful, industry and government must be aligned and working together,” said de Juniac.
Globally, the livelihoods of some 65.5 million people are dependent on the aviation industry, including sectors such as travel and tourism. Among these are 2.7 million airlines jobs.
In a scenario of severe travel restrictions lasting for three months, IATA research calculates that 25 million jobs in aviation and related sectors are endangered across the world besides the Asia Pacific, 5.6 million jobs in Europe, 2.9 million in Latin America, 2 million in North America, 2 million jobs in Africa and 0.9 million in the Middle East.
In the same scenario, airlines are expected to see full-year passenger revenues fall by US$252 billion (-44%) in 2020 compared to 2019.
According to the global body, the second quarter is the most critical with demand falling 70% at its worst point and airlines burning through US$61 billion in cash.
IATA, which represents some 290 airlines comprising 82% of global air traffic, is scoping a comprehensive approach to re-booting the industry when governments and public health authorities allow.
A multi-stakeholder approach will be essential, it said. “We are not expecting to restart the same industry that we closed a few weeks ago. Airlines will still connect the world. And we will do that through a variety of business models.
“But the industry processes will need to adapt. We must get on with this work quickly. We don’t want to repeat the mistakes made after 9/11 when many new processes were imposed in an uncoordinated way. We ended up with a mess of measures that we are still sorting out today. The 25 million people whose jobs are at risk by this crisis will depend on an efficient re-start of the industry,” said de Juniac.
Meanwhile, Malaysian Association of Tour and Travel Agents (Matta) says airlines should make cash refunds as their top priority and not issue credit notes which may have little or no value should they go insolvent.
Vice-president (air transportation) Shazli Affuat Ghazali said Matta is concerned many passengers and travel agents might not be getting refunds due to them from flight cancellations as a result of the Covid-19 pandemic.
While airlines were being bailed out or given loans to resume operations post pandemic, he noted they must first payout cash refunds to restore public confidence.
“It is a matter of principle to return payments collected from customers for services not rendered due to the current extraordinary circumstances.
“One of MavCom’s (Malaysian Aviation Commission) functions is to provide a mechanism for protection of consumers and the commission should have stepped forward to announce clearly what measures are in place or will be introduced for customers to get their money back,” he said in a statement today.
Shazli Affuat stressed that while it is painful enough for individual passengers to wait indefinitely for refunds, the agony is multiplied manifold among travel agents with angry customers.
“Airlines should give full refund for payments made by passengers and travel agents without applying standard terms and conditions, which are applicable during normal times but not in a pandemic.
“Also, airlines should not differentiate between group bookings for Group Inclusive Tour (GIT) and individuals travelling as Free Independent Travellers (FIT),” he said, adding that the same treatment will hasten refunds across the board and recovery post-pandemic.
Meanwhile, Shazli Affuat said Matta is looking forward to the Ministry of Transport issuing a directive to airlines – which include notifying passengers and travel agents that normal cancellation and rebooking charges do not apply from the time of Covid-19 outbreak until end of the pandemic.
“(Other than that) granting customers the option for cash refund or available credit can be used within three years. Rebooking allowed within two years from original date of travel and refunds for flight cancellations must be made in full, including ancillary fees paid.”
Uf refunds due to travel agents are unfairly withheld, he said affected passengers will not be getting back their money – and it could trigger unnecessary lawsuits, which do not auger well for the tourism industry.