Aviation sector to take a massive hit

Story By: Indre Varnelyte
Tuesday, March, 31 2020 - 16:18

With the coronavirus pandemic taking over the world, the aviation sector is expected to take a massive hit.

Thousands of grounded planes, nearly empty flights and airports looking loke ghost towns - this is a sad reality in the aviation industry.

Aviation consultancy firm CAPA (Centre for Aviation) has forecast that the domestic aviation industry in India could incur losses of US$3.3-$3.6 billion in the first quarter of fiscal 2021 and that 150 aircraft could be grounded.

Sydney-based CAPA estimates that domestic airlines could lose approximately $1.75 billion, airports and concessionaries between $1.5 and $ 1.75 billion, and ground handlers between $80 million and $90 million during the first quarter of fiscal 2021. This is despite a fall in crude oil prices.

CAPA’s estimates are based on airlines being grounded till April 15, when the current 21-day lockdown comes to an end.

Europe’s airlines are expected to lose $76bn (£63bn) in passenger revenues over the course of 2020 because of travel bans combating the spread of the coronavirus outbreak, the industry body has warned.

The figures from the International Air Transport Association (Iata) suggest European airlines will bear a significant part of the global hit.

Iata has already warned it expects demand for passenger flights to fall by 38%, causing global revenues to fall by $252bn in 2020, almost halving the industry’s revenues compared with 2019.

Those estimates were based on three-month shutdowns across much of the world, with the lack of cashflow threatening the survival of airlines globally.

The latest announcement on Friday from American Airlines reflect the trends around the industry: over the next two months, it expects to fly as little as 20% of its domestic schedule and between 10% and 20% of its international schedule.
Many of those planes operate half empty. American CEO Doug Parker said his planes are about 15% full.

Worldwide, nearly a third of the 17,750 passenger jets in operation are parked, according to the aviation data firm Cirium. That number is growing rapidly: It said 1,000 more planes were parked since its update a day earlier.

The industry this week called for governments around the world to intervene with cash support – including cash injections, loans and tax reliefs – to stave off a “liquidity crisis”.


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