The FINANCIAL - On a global basis, emergency aid of up to $200 billion is required to save airlines

On a global basis, emergency aid of up to $200 billion is required to save airlines

On a global basis, emergency aid of up to $200 billion is required to save airlines

The FINANCIAL -- Extensive cost cutting measures are being implemented by the region’s carriers to mitigate the financial impact of COVID-19. However, due to flight bans as well as international and regional travel restrictions, airlines’ revenues are plummeting—outstripping the scope of even the most drastic cost containment measures. With average cash reserves of approximately two-three months in the region, airlines are facing a liquidity crisis. Support measures are urgently needed. We estimate the total jobs supported by aviation in Europe to be 12.2 million. On a global basis, IATA estimates that emergency aid of up to $200 billion is required.

The International Air Transport Association (IATA) welcomed decisions taken by aviation regulators to provide flexibility to airlines and flight crew during the COVID-19 crisis.

“Safety is the industry’s top priority. Countries have a well-established licensing system to ensure this. Airlines and their employees are facing an unprecedented challenge in coping with the business and operational impacts of the COVID-19 crisis. In this extraordinarily difficult environment, we are grateful for actions to ease regulatory requirements that do not impact the safety of flights,” said Gilberto Lopez Meyer, IATA’s Senior Vice President, Safety and Flight Operations.

Examples of actions being taken by regulators:

The European Aviation Safety Agency (EASA) has published templates which may be used by state regulators to notify EASA of the use of flexibility provisions. This allows for the extension to the validity periods for licences, ratings, endorsements, certificates and attestations of aircrew, instructors, examiners, aircraft maintenance licence holders and air traffic controllers as well as extension of Airworthiness Review Certificates.

The United Arab Emirates General Civil Aviation Authority (GCAA) has published a Decision allowing for flexibility to the validity periods for licenses, ratings, certificates applicable to Flight Crew and Cabin Crew.

Civil Aviation Administration of China (CAAC) has recognized the need for flexibility in the delivery of classroom training and for the completion of recurrent training requirements. They have also granted the ability to extend the validity periods to some elements of training applicable to pilots, engineers, cabin crew and dispatchers.
The UK Civil Aviation Authority has put a process in place to allow an extension to the validity of pilot and cabin crew requirements.

In Mexico, the Agencia Federal de Aviación Civil, (AFAC) is extending the validity of permits, licenses and/or certificates for technical personnel for three months.
“Aviation is built on partnership and working together. The actions taken by these regulators will provide airlines and licensed crew with the necessary flexibility for licence extensions without compromising safety. We urge others to quickly follow suit and grant similar short-term relief,” said Lopez Meyer.

IATA is also offering help for airlines whose IATA Operational Safety Audit (IOSA) cannot be performed owing to COVID-19 travel restrictions that make it impossible for auditors to visit airlines, or because of other circumstances related to the current crisis. Extensions of IOSA audits are being offered for periods of up to six months, however airlines will be required to complete an IOSA safety questionnaire at a minimum of every 60 days during the extension period. The applicable Temporary Revision to the IOSA Program Manual (IPM) and affected registrations on the IOSA Registry can be consulted at IOSA.

IATA is proposing a number of options for governments to consider. They include:

Direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19;
Loans, loan guarantees and support for the corporate bond market by the Government or Central Banks. The corporate bond market is a vital source of finance, but the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies.
Tax relief: Rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other Government-imposed levies.

“As soon as COVID-19 is under control, the global economy will need to rapidly rebuild. Air connectivity will be essential for that to happen. But without help now, airlines will be in no fit state to restart operations. Many airlines may not exist at all. Assistance now will keep essential cargo services going, preserve as many jobs as possible, and ensure that supply chains and tourism can recover quickly,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe.

Latest Eurocontrol figures show that the worst hit European states include Latvia (-91%) Italy (-87%) Slovakia (-78%) Poland (-78%) and Slovenia (-77%). Of the biggest markets, air travel is down 58% in France, 57% in Spain, 50% in Germany, 48% in the Netherlands, 42% in Turkey, and 37% in the UK. Total jobs across all of Europe (including Eurasia) supported by aviation are 12.2 million, generating GDP of $823 billion.

 

Author: The FINANCIAL