Global airline industry is in a crisis. The collapse in demand is unprecedented. And airlines are struggling to match capacity to the fast-changing and unprecedented situation, emerging as a result of coronavirus or Covid-19.
Airlines have been among the hardest-hit by the Covid-19 outbreak. IATA estimates that airline revenues could fall by $113bn if the virus is not contained.
However, this estimate was made before the announcement of the restrictions to travellers inbound to the United States from the Schengen area.
In this context, the European Commission (EC) recently suspending the ‘slot use’ rules is significant.
Under the “use it or lose it” rule for airport slots, carriers are required to continue to operate an airport slot for at least 80% of the time. Because of the Covid-19 emergency, airlines have been unable to respond by adjusting their capacity.
The suspension of the slot use rules until June will allow airlines to begin putting in place measures to cope with the unprecedented fall in traffic, but industry leaders say it is a shorter period than airlines had requested.
Airlines need the suspension to be extended to cover the whole season (up to October), as they claim other regulators worldwide have already agreed. Therefore they urge the EC d to review the extension request by April 15.
Many airlines, particularly in Asia and Europe, are in a crisis. In the last 10 days, one European low-cost airline, got grounded due to financial crunch.
The governments should consider the possibility of providing aid to struggling airlines to enable them to survive the drop in demand as a result of the coronavirus outbreak.
IATA predicted that worldwide passenger revenues would fall between 11 and 19% this year.
However, no estimates are yet available for the impact on cargo operations.
A plunge in oil prices caused by the virus could cut airlines’ fuel costs by up to $28bn this year, which would provide some relief but would not have a significant impact.
While welcoming the EC’s temporary suspension of the ‘slot use rules’, IATA says the decision reflects the unprecedented situation facing the airline industry.
However, granting the suspension only until June is the very minimum the industry needs, and a decision on a full suspension until October will be needed within the next month to allow airlines to plan their schedules.
Every country should immediately suspend the ‘slot use rules’, which will allow airlines to plan schedules and redeploy aircraft and crew to where demand is highest.
Such a measure will improve economic and environmental sustainability by ensuring that flights for which there is no demand can be cancelled.
It will enable airlines more flexibility to plan for the recovery phase and re-introduce capacity where and when needed and ensure that the industry can return to normal as quickly as possible once the crisis is over.
The aviation industry will be crucial for the global economy to recover as quickly as possible once Covid-19 is brought under control.
Therefore, governments and regulators around the world should provide emergency relief to the global travel industry as it faces severe cashflow conditions.
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