The International Air Transport Association (IATA) has released new analysis today which shows that 25 million jobs are at risk of disappearing due to the COVID-19 crisis. IATA claims that 2.7 million are airline jobs and over 65.5 million people are dependent on the aviation industry and this includes travel and tourism industry.
Global air travel demand has plummeted after the pandemic has led to country after country restricting travel and in most cases like India – a complete lockdown has meant that not a single commercial flight has taken off since 25th March. India is not alone in this, many other countries have resorted to lockdown, in an environment where the number of affected has been growing and there has not been a breakthrough in medicine, as yet.
IATA has based its study with a scenario of severe travel restrictions lasting for three months. The global body things that job losses will be the most in Asia Pacific, followed by Europe.
- 2 million jobs in Asia-Pacific
- 6 million jobs in Europe
- 2.9 million jobs in Latin America
- 2.0 million jobs in North America
- 2.0 million jobs in Africa
- 0.9 million jobs in the Middle East
While plummeting demand is one of the cause, the financial scenario of airlines is not going to be good with the same report expecting a full year passenger revenue fall by $252 billion (-44%) in 2020 compared to 2019, with a huge drop in demand from April to June.
While a couple of countries have come forward to announce measures for airlines, nothing of this sort is happening in India yet. Aviation – is still considered a luxury in government policy and any subsidy could attract widespread criticism. IATA is calling for direct financial support, loans, loan guarantees and support for the corporate bond market along with tax relief for airlines.
While the lockdown in India ends of 14th April and most airlines have started selling tickets for flights from 15th April, it is unclear if the lockdown would be extended and how. Delayed decisions like this put additional pressure on the airline industry – which in India was already structurally weak and except IndiGo – which has huge cash reserves but could well be tested with this lockdown.
GoAir and Spicejet have already announced salary cuts and most airlines are taking measures to conserve cash.
An earlier IATA report had predicted that India could see a drop in demand by 36% translating into over 68,000,000 passengers (origin – destination volume). In absolute numbers this is next only to Japan which will see higher impact by passenger volume.
It is too early to predict on where we are headed. Without a cure in hand and unsure of the circumstances in which travel would re-start, any prediction is half baked. Industry bodies and consultancies have had to revise their predictions in the last few weeks and we would know it’s over, only when it’s over!