Local airlines are calling for government intervention to prevent the aviation industry from going bankrupt because of the huge impact of the coronavirus disease 2019 pandemic.
Robert Lim, vice president and executive director of Air Carriers Association of the Philippines, sent a letter to government economic managers for intervention as Philippine carriers were facing “existential threat to their survival”.
“Given these extraordinary times where the survival of the domestic airline industry is at stake, ACAP member airlines urgently appeal to your good offices for timely government intervention which is indispensable, (so that) Philippine aviation will have the capacity to resume its vital role of connecting the people father archipelago for trade, commerce and tourism and contribute meaningful to the recovery of the economy,” Lim said in the letter.
ACAP members include Philippines Airlines Inc., Air Philippines Corp., Cegbo Inc., Cebu Air Inc. and Philippines AirAsia Inc.
Lim said the member airlines shut down their passenger operations until April 14, 2020 amid the enhanced community quarantine over Luzon. This translated into 30,000 cancelled flights and affected almost five million passengers.
“With no revenue flow seen for the next several weeks or even months, ACAP members airlines will urgently need government intervention,” he said.
Aviation think tank Center for Asia Pacific Aviation earlier predicted that by end of May 2020, most airlines in the world would be bankrupt because of COVID-19.
The International Air Transport Association estimated that the COVID-19 crisis would reduce passenger demand in Asia-Pacific by 37 percent this year compared to 2019, with a revenue loss of $88 billion.
ACAP requested the government to provide a credit guarantee scheme (not cash) that guarantees the banking sector’s loans and credit lines, most of which are secured with collaterals, to remove its aversion to the poor credit risk of the airline industry under the present operating environment.
“It cannot be overemphasized that only the government is in a position to nag the extraordinary situation facing the industry where its ability to generate revenue has been frozen,” Lim said.
“To enable airlines and support industries to restart operations after the lifting of the ECQ, we ask the government to provide access to emergency lines of credit to hotel fun six moths operations, perhaps longer if this crisis extends, in order for the industry to remain viable until overall demand recovers,” he said.
ACAP said that upon lifting of the ECQ by April 14, uniformity in aviation transport regulations should be implemented in the entire country and that LGUs could be mandated to align with the national government.
The group asked a long-term facility at attractive rates or a guaranty facility to enable airlines to restructure debt to a more manageable level and give them leverage to negotiate better terms from aircraft lessors, lenders and creditors to ensure a successful recovery plan.
“ACAP member airlines are not seeking a ‘handout’ at the expense of the Filipino taxpayers. Rather, what is being sought for its ready access to working capital which is required to restart and sustain continued viable operations,” Lim said.
