COVID-19 Pandemic Causing Fiscal Turbulence for World’s Airlines
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By David E. Hubler
Contributor, In Homeland Security
As more and more of the world’s intercourse shuts down, the industry largely responsible for opening the world is among those hardest hit by the COVID-19 pandemic: the airline industry.
The International Air Transport Association (IATA) trade group has projected a possible loss in worldwide airline revenues of up to $113 billion this year.
”That is one-fifth of last year’s overall revenues and four times higher than IATA estimated in February, when the coronavirus was still believed to be a Chinese problem rather than a global one,” France24 observed.
A Harbinger of Airlines’ Woes Was the Collapse of British Carrier Flybe
A harbinger of the airlines’ woes was the collapse earlier this month of the British carrier Flybe, which had provided more than half of UK domestic flights outside London. Forbes attributed the failure to the airline’s “financial woes and weakened demand because of the Covid-19 outbreak.”
Flybe was the first airline casualty since the start of the COVID-19 outbreak and put as many as 2,400 jobs at risk.
The Economist called the speed and depth of the airline industry’s nosedive “breathtaking.”
Airline Revenues Are in Free Fall as Travel Restrictions Mount
The immediate pain is evident, The Economist went on. “European and American carriers’ share prices have declined faster even than the globe’s covid-struck stock markets. Revenues are in free fall as travel restrictions mount and as fear of infection puts people off spending hours with others in enclosed spaces.”
Last Friday, British Airways CEO Alex Cruz sent a memo to the airline’s 45,000 employees in which he referred to COVID-19 as “a crisis of global proportions like no other we have known.” He warned that British Airways “will lay off staff, suspend routes and ground aircraft because of lower demand due to the coronavirus pandemic.”
Coming on the heels of Cruz’s warning, on Monday British Prime Minister Boris Johnson announced a series of austerity measures. “Now is the time for everyone to stop non-essential contact with others and stop all non-essential travel,” Johnson said.
US Carriers Not Immune to the Worldwide Shutdown of Non-Essential Business and Travel
U.S. carriers of course are not immune to the worldwide shutdown of non-essential businesses and travel. CNBC reported that U.S. airlines are “grappling with the once unthinkable scenario of halting all commercial domestic air travel.” That hasn’t happened since the 9/11 terrorist attacks.
“The abrupt cuts across airlines would reverberate around the economy. U.S. airlines alone employed some 747,000 people as of the end of January, according to federal data,” CNBC added. “As carriers park aircraft and defer orders, manufacturers as large as Boeing and Airbus and their suppliers are now on shakier footing.”
The airline industry has always been subject to the vagaries of influencing industries and world events. The current pandemic is one of the most serious. Whether it will last for months or soon subside, no one can tell. All we can do is wait — just as we’ve learned to do at airports.
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