European Airlines Revenue Losses Mount – Urgent Government Support Required

The International Air Transport Association (IATA) strengthened its call for urgent action from European governments to provide financial relief to airlines. The latest IATA scenario for potential revenue loss by European carriers is US$76 bn and passenger demand (measured in Revenue Passenger Kilometers) is projected to be 46% below 2019 levels. A decline of this magnitude puts at risk about 5.6 million jobs and $378bn in GDP supported by air transport. 

Some of the impacts at national level include:
 

• United Kingdom
  • 113.5mn fewer passengers resulting in a $21.7bn revenue loss, risking almost 402,000 jobs and around $32.7bn in contribution to the UK economy.
• Spain  
  • 93.7mn fewer passengers resulting in a $13bn revenue loss, risking 750,000 jobs and $49.4bn in contribution to Spain’s economy.
• Germany
  • 84.4mn fewer passengers resulting in a $15bn revenue loss, risking 400,000 jobs and $28bn in contribution to Germany’s economy.
• Italy
  • 67.7mn fewer passengers resulting in a $9.5bn revenue loss, risking 256,000 jobs and $67.4bn in contribution to Italy’s economy.
• France
  • 65mn fewer passengers resulting in a $12bn revenue loss, risking 318,000 jobs and $28.5bn in contribution to France’s economy.

To minimize the sweeping damage across the European economy that these losses would have, it is vital that governments step up their efforts to aid the industry. Some European governments have already acted, including Norway, Sweden, Finland, Spain, and Italy. But more help is needed. IATA is calling for a combination of:
 

• direct financial support, 
• loans, loan guarantees and support for the corporate bond market
• tax relief.

“The air transport industry is an economic engine, supporting up to 12.2 million jobs across Europe and $823 billion in GDP. Every job created in the aviation industry supports another 24 jobs in the wider economy. Governments must recognize the vital importance of the air transport industry, and that support is urgently needed. First, this will keep airlines financially viable during the present lockdown, preserving jobs, maintaining essential connections to repatriate citizens, and carrying life-saving air cargo supplies. Secondly, this would avoid broad economic damage by ensuring that airlines can rapidly scale-up operations when travel restrictions are lifted, jump-starting the European and global economies,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe.

In addition to financial support, IATA called for regulators to provide relief measures. Key priorities in Europe include:
 

• An urgent temporary amendment to the EU261 passenger rights regulation. Short-term flexibility is needed immediately. Permitting the use of vouchers instead of refunds, as has been allowed for some tour operators, would give airlines breathing space to repair cash flows.  
• Providing a package of measures to ensure air cargo operations, including fast track procedures to obtain overflight and landing permits, exempting flight crew members from 14-day quarantine, and removing economic impediments (overflight charges, parking fees, and slot restrictions).

“Some regulators are taking positive action. We are grateful to the European Council for insisting on a full-season waiver to the slot use rule. This will enable airlines and airports greater flexibility for this season and greater certainty for next summer. But there is more to do on the regulatory front. Amendments are urgently needed to give more flexibility for EU 261. And they must take measures to keep air cargo moving,” said Schvartzman.