THE impact of the coronavirus disease (COVID-19) in the Philippines’ aviation sector could worsen with a potential revenue loss of $4.5 billion and job cuts of 500,000 this year, according to the International Air Transport Association (IATA).
IATA’s latest report showed the Philippines’ potential revenue and job loss is significantly higher compared to last month’s assessment of $3.5 billion revenue and over 400,000 job losses for the year when as passenger demand was expected to decline by 47 percent.
Airlines in Asia-Pacific will see a revenue drop of $113 billion in 2020 and a 50 percent fall in passenger demand in 2020 as against last year.
These estimates are based on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental, according to IATA.
“The situation is deteriorating. Airlines are in survival mode. They face a liquidity crisis with a $61 billion cash burn in the second quarter. We have seen the first airline casualty in the region. There will be more casualties if governments do not step in urgently to ensure airlines have sufficient cash flow to tide them over this period,” said Conrad Clifford, IATA regional vice president in Asia-Pacific.
He identified India, Indonesia, Japan, Malaysia, the Philippines, Republic of Korea, Sri Lanka and Thailand as priority countries that need to take action. IATA is calling for a combination of direct financial support, loans, loan guarantees and support for the corporate bond market and tax relief.
“Providing support for airlines has a broader economic implication. Jobs across many sectors will be impacted if airlines do not survive the COVID-19 crisis. Every airline job supports another 24 in the travel and tourism value chain. In Asia-Pacific, 11.2 million jobs are at risk, including those that are dependent on the aviation industry, such as travel and tourism,” said Clifford.
“Airlines continue to perform an important role currently with the transport of essential goods, including medical supplies, and the repatriation of thousands of people stranded around the world by travel restrictions. And after the COVID-19 pandemic is contained, governments will need airlines to support the economic recovery, connect manufacturing hubs and support tourism. That’s why they need to act now — and urgently — before it is too late,” he added.
Last Friday, local airline operators Philippine Airlines, Cebu Pacific Inc. and Philippine AirAsia announced flight suspension for both domestic and international flights are extended until May 15 this year, in line with the government extension of the enhanced community quarantine in Luzon to combat the spread of COVID-19 in the country.
Earlier, the airlines asked the government to help them recover from huge losses due to the impact of the COVID-19 in the aviation sector.
Roberto Lim, Air Carrier Association of the Philippines vice chairman and executive director, said the local airline industry is expected to incur P8 billion revenue loss per month due to expenses on aggregate fixed cost including aircraft lease, rentals, amortization, loans and salaries while operations remain suspended.
