MIAMI– The International Air Transport Association (IATA) and its members continue to support governments in their efforts to contain the spread of COVID-19, urging them to prepare for its adverse economic consequences, assist airlines’ financial frailty, and follow WHO guidelines.
According to IATA’s press release, its trifold recommendation comes in response to the US government’s recent banning of entry to the US of non-US citizens and individuals who are not legal permanent residents of the US, who have been in the Schengen Area in the past 14 days.
“These are extraordinary times and governments are taking unprecedented measures. Safety—including public health—is always a top priority. Airlines are complying with these requirements,” said Alexandre de Juniac, IATA’s Director General and CEO.
de Juniac pointed out that “Governments must also recognize that airlines—employing some 2.7 million people—are under extreme financial and operational pressures. They need support.”
Preparing for the economic impact
When taking such measures, IATA, which represents some 290 airlines comprising 82% of global air traffic, urges governments to prepare for the adverse economic impact that the bans will cause, considering the size of the US-Europe market.
According to IATA’s numbers for 22019 2019, a total of around 200,000 flights were scheduled between the United States and the Schengen Area, which equals to around 550 flights per day and around 46 million passengers or 125,000 travelers every day.
The following countries constitute the Schengen Area: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.
Iceland has the highest exposure to the US market, with 17.1% of its total O-D air traffic, followed by the Netherlands (6.5%) and France (5.2%).
However, out of the 26 Schengen countries, the most affected include Germany, France, and the Netherlands. The U.K., which is exempt from the ban, is the single largest European market from the U.S., accounting for 31% of flights – 137 a day carrying 31,000 passengers in April 2019.
This is almost as big as the next three largest countries combined: Germany (13%), France (11%), and the Netherlands (9%) for a total of 33% or 143 flights a day carrying 35,000 passengers.
For the Transatlantic market, this is a considerable issue, as most of those flights land into Schengen-zone airports. Nevertheless, the US measure does acknowledge the need to continue to facilitate trans-Atlantic trade.
de Juniac asserted that while governments must impose the measures they consider necessary to contain the virus, they must also be “fully prepared to provide support to buffer the economic dislocation that this will cause.”
“In normal times, air transport is a catalyst for economic growth and development. Suspending travel on such a broad scale will create negative consequences across the economy. Governments must recognize this and be ready to support,” said de Juniac.
Airlines’ commercial viability
Before the US and other governments (including Israel, Kuwait, and Spain) decided to ban air travel from Europe to their respective countries, IATA had already estimated on March 5 that the COVID-19 crisis could obliterate some $113 billion of revenue for the commercial aviation industry.
IATA states that the total value of the US-Schengen market in 2019 was $20.6 billion, of which the biggest markets are US-Germany ($4 billion), US-France ($3.5 billion) and US-Italy ($2.9 billion).
As a result, IATA’s Director General warned that the bans would create tremendous cash-flow pressures for carriers: “We have already seen Flybe go under. And this latest blow could push others in the same direction. Airlines will need emergency measures to get through this crisis.”
The CEO added that governments should seek out “all possible means to assist the industry through these extreme circumstances. Extending lines of credit, reducing infrastructure costs, lightening the tax burden are all measures that governments will need to explore.”
“Air transport is vital, but without a lifeline from governments, we will have a sectoral financial crisis piled on top of the public health emergency,” said de Juniac.
The World Health Organization (WHO) continues to advise against the application of travel or trade restrictions to countries experiencing outbreaks. However, on February 29, 2020, the organization issued revised guidance, stating the following:
“Travel measures that significantly interfere with international traffic may only be justified at the beginning of an outbreak, as they may allow countries to gain time, even if only a few days, to rapidly implement effective preparedness measures.”
“Such restrictions must be based on a careful risk assessment, be proportionate to the public health risk, be short in duration, and be reconsidered regularly as the situation evolves.”
“We urge the US and other governments that have placed travel restrictions to follow the WHO guidance. This is fast evolving. Health and safety are the top priorities for governments and the air transport sector. But the effectiveness and necessity of travel restrictions must be continuously reviewed,” concluded de Juniac.
Article written by Helwing Villamizar