Abu Dhabi, UAESaturday 4 July 2020

Iata urges governments to include airlines in economic stimulus packages

The Middle East's aviation industry contributes $130bn to the regional economy, supports 2.4 million jobs and accounts for 4.4% the gross domestic product

A worker disinfects the cabin of an Ethiopian Airlines aircraft at Bole International Airport in Addis Ababa, Ethiopia. The deadly coronavirus Covid-19 has hit the global aviation industry hard. EPA
A worker disinfects the cabin of an Ethiopian Airlines aircraft at Bole International Airport in Addis Ababa, Ethiopia. The deadly coronavirus Covid-19 has hit the global aviation industry hard. EPA

The International Air Transport Association (Iata) urged Middle East governments to provide emergency aid to their airlines as part of their wider economic stimulus packages, helping carriers deal with the impact of the novel coronavirus outbreak and preserving jobs.

"Many governments in the Middle East pledged economic stimulation packages, our ask is that governments seriously and urgently consider the airlines in these economic packages," Muhammad Ali Albakri, Iata's regional vice president for Africa and the Middle East, told reporters on a conference call on Thursday. "It's very important to understand that the aviation industry in the Middle East supports millions of jobs."

Oman, UAE, Saudi Arabia, Egypt and Morocco introduced economic stimulus packages amid global efforts to fight the impact of the virus that disrupted manufacturing, supply chains, trade, travel and tourism.

Iata estimates Middle East carriers have lost $7.2 billion (Dh26.4bn) in revenue as of March 11 and have cash reserves for two months, thus facing a "liquidity crisis", Mr Albakri said.

Iata estimates airlines globally need $220bn of emergency aid to weather the crisis brought on the Covid-19 outbreak, which has reduced air travel demand to zero for many operators. Airlines worldwide shrank their capacity and axed jobs in efforts to preserve cash as the pandemic continues to spread in more countries, forcing governments to shut borders and imposer tighter travel bans.

The Middle East's air transport sector should be included in economic aid packages as the industry contributes $130bn to the regional economy, supports 2.4 million jobs and comprises 4.4 per cent of the gross domestic product, according to Iata.

Financial support for airlines is needed to prevent job losses in the industry and related sectors. It's critical to enabling global supply chains to operate, provide connectivity for tourism and trade, which will contribute to post-pandemic economic growth, Mr Albakri said.

The industry group is asking governments to support Middle East carriers through direct financial support to compensate for reductions in revenue and liquidity due to the outbreak. Government and central banks can also help airlines with loans and loan guarantees, support for corporate bond markets, reduce taxes, temporary waiver of ticket taxes and other government-imposed levies.

Regional carriers are implementing "extensive" cost-cutting measures to mitigate the financial impact of the outbreak but increasing travel restrictions around the world means airline revenues are "plummeting" and outstripping the scope of event the most drastic cost measures, he added.

In the Middle East, 16,000 passenger flights have been cancelled--and could "increase exponentially" as more measures come into effect-- while demand on existing routes has fallen by as much as 60 per cent, Iata said. Air ticket refunds have increased by 75 per cent in February 1 to March 11 this year compared to the same period in 2019.

International bookings in the Middle East fell 40 per cent year-on-year in March and April, and dropped 30 per cent year-over-year in May and June, according to Iata.

Iata's discussions with governments and regulators in the region are ongoing.

"They’re listening, they understand the risks and we are working with each and every regulator to come up with the proper and immediate package to help airlines in their own countries," Mr Albakri said.

The executive noted that Dubai, Saudi Arabia and Morocco have agreed to temporarily suspend rules requiring airlines to use the majority of their take-off and landing slots at airports or lose them, allowing airlines to stop flying near-empty planes during the crisis.

Updated: March 26, 2020 10:28 AM

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