Flight operations across the world have been crippled and airlines are in a survival mode. They face a liquidity crisis with a US$61 billion cash burn in the second quarter. Amitabh Khosla, International Air Transport Association (IATA) Country Director for India in an exclusive interview with Travel And Tour World gives an overview.
Travel And Tour World: By when it is expected that the air travel will return to normalcy?
Amitabh Khosla : Much depends on when borders are re-opened and public confidence in the safety of air travel returns. The state of the global economy also plays a role, as air travel is highly correlated with GDP growth. With most economists predicting a global recession this year, we do not see a near-term recovery.
Travel And Tour World: What will be the wider economic impact on the air transport collapse?
Amitabh Khosla : There are two parts to this. The first is jobs. If airlines do not survive the COVID-19 crisis, jobs across many sectors will be impacted. Some 65 million jobs are linked to aviation, including those in the travel and tourism sectors. Every airline job saved will keep 24 more people employed. There are 25 million jobs that are at risk as a result of this crisis, including 3 million in India.
Secondly, airlines provide the connectivity for the transport of essential goods, including medical supplies, and the repatriation of thousands of people stranded around the world by travel restrictions. And after the COVID-19 pandemic is contained, governments will need airlines to support the economic recovery, connect manufacturing hubs, and support tourism.
Travel And Tour World: What relief measures are expected from the government?
Amitabh Khosla : We are advocating for governments to provide relief in various ways, mainly:
• Direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19;
• Loans, loan guarantees and support for the corporate bond market by governments or central banks. The corporate bond market is a vital source of finance for airlines, but the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies.
• Tax relief: Rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other government-imposed levies.
Travel And Tour World: How the consumer demand will be revived once the lockdown is lifted?
Amitabh Khosla : An immediate rebound from the catastrophic fall in passenger demand appears unlikely. Passenger confidence will suffer a double whammy even after the pandemic is contained—hit by personal economic concerns in the face of a looming recession on top of lingering concerns about the safety of travel.
As countries lift restrictions, confidence boosting measures will be critical to re-start travel and stimulate economies. Governments and industry must be quick and coordinated with these confidence-boosting measures.
Travel And Tour World: The current situation has led to furloughing of staff, what can be done to control the unprecedented damage, any job retention scheme can be suggested?
Amitabh Khosla : Airlines around the world are in survival mode. They face a liquidity crisis with a US$61 billion cash burn in the second quarter.
In India, we could see a 47% drop in passenger demand this year, when compared to 2019. Passenger revenue for all carriers operating to India, not just Indian carriers, will be severely impacted as well with a USD$11.2 billion fall in 2020 as compared to 2019.
The Government of India needs to urgently provide financial support to the airlines and related businesses to ensure they have sufficient cash flow to tide them over this period.