As the world is fighting to get out of the grips of the Covid-19 pandemic, the aviation industry goes through an unimaginably difficult time, seeing demand destruction, burning through cash and struggling to stay afloat.
Covid-19 has decimated air travel globally. Airlines worldwide have been largely grounded since mid-March.
The pandemic caused commercial air travel to come to a standstill for several months, and it is now at only a fraction of 2019 demand!
Air travel has fallen on hard days since the onset of the coronavirus pandemic six months ago, with the number of travellers dropping significantly around the world.
Airlines in particular are burning through cash because it cannot cut costs fast enough to make up for the impact of not being able to do business. Borders for the most part remain closed.
Some governments have cautiously reopened borders since then, but there has been limited uptake because either quarantine measures make travel impractical or the frequent changes in Covid-19 measures make planning impossible.
For the second half of the year, the International Air Transport Association expects, on average, airlines to burn through cash at about $300,000 per minute for a total of $77bn. And that’s on top of the $51bn cash burn in the second quarter!
The industry is not expected to turn cash positive until 2022, according to IATA, which represents some 290 airlines that account for 82% of global air traffic.
The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of $5 to $6bn a month in 2021.
A solution being touted by industry experts is systematic testing for Covid-19 prior to departure. Some even take a step further and call for a Covid-19 test at the arriving airport as well.
These, they argue, give the governments the confidence to reopen borders, which in most regions, have been closed since mid-March to fight Covid-19.
“The key to restoring the freedom of mobility across borders is systematic Covid-19 testing of all travellers before departure. Testing all passengers will give people back their freedom to travel with confidence. And that will put millions of people back to work,” Alexandre de Juniac, IATA’s director general and CEO noted at a virtual global media event recently.
He called for the development and deployment of rapid, accurate, affordable, easy-to-operate, scalable and systematic Covid-19 testing for all passengers before departure as an alternative to quarantine measures in order to re-establish global air connectivity.
IATA, he said, will work through the International Civil Aviation Organisation (ICAO) and with health authorities to implement this solution quickly.
A public opinion research done by the association revealed strong support for Covid-19 testing in the travel process. Some 65% of travellers surveyed agreed that quarantine should not be required if a person tests negative for Covid-19.
Passengers’ support for testing is evident in the following survey results- Some 84% agreed that testing should be required of all travellers, while 88% agreed that they are willing to undergo testing as part of the travel process.
In addition to opening borders, public opinion research also indicated that testing will help to rebuild passenger confidence in aviation. Survey respondents identified the implementation of Covid-19 screening measures for all passengers as effective in making them feel safe, second only to mask-wearing.
And, the availability of rapid Covid-19 testing is among the top three signals that travellers will look to for reassurance that travel is safe (along with the availability of a vaccine or a treatment for the pandemic).
While the crisis is growing longer and deeper than anybody could have imagined, airlines did receive $160bn in support from governments. That was a “lifeline”.
The industry would have seen many more bankruptcies and job losses without it. However, most of these support programmes are coming to an end.
“It is time to ask governments to take extra measures to replace or extend them into the longer term. The potential for failures and job losses in the coming months is enormous,” de Juniac insists.
Governments must be actively involved in supporting the entire sector’s finances through this unimaginably difficult time. And they should do it taking into account the fact that nearly 10% of global economic activity is related to travel and tourism.
Kick starting global economy hinges a lot on safely reopening borders and ensuring proper connectivity. Therefore, supporting the industry in these challenging times is an investment worth making.
And only a financially viable industry will be able to accelerate a broad economic recovery when borders reopen!
* Pratap John is Business Editor at Gulf Times. Twitter handle: @PratapJohn