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Friday, March 29, 2024

Coronavirus imperils over 400,000 jobs in PH aviation

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The Philippine aviation industry may lose more than 400,000 jobs and $3.5 billion in revenues because of the coronavirus disease 2019 pandemic, according to the International Air Transport Association.

IATA said in its latest report the pandemic could cost 419,800 jobs and $3.5-billion reduction in revenues while its impact to the gross domestic product was estimated to reach $3.74 billion.

It could also affect travel demand by as many as 21.87 million passengers.

IATA said because of this, the Philippine government and other Asia Pacific countries should provide financial aid to their airline industry impacted by the COVID-19 crisis.

IATA said Australia, New Zealand and Singapore announced a substantial package of measures to support their aviation industry.

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“But others in the region, including India, Indonesia, Japan, Malaysia, the Philippines, Republic of Korea, Sri Lanka and Thailand have yet to take decisive and effective action. Jobs as well as the GDP supported by the industry are at risk,” said IATA regional vice president for Asia-Pacific Conrad Clifford.

The Air Carriers Association of the Philippines earlier sent a letter to the Philippine government for intervention as Philippine carriers were facing “existential threat to their survival”.

ACAP requested the government to provide a credit guarantee scheme and long-term facility at attractive rates or a guaranty facility to enable airlines to restructure debt, among others.

“Governments need to ensure that airlines have sufficient cash flow to tide them over this period, by providing direct financial support, facilitating loans, loan guarantees, and support for the corporate bond market. Taxes, levies, and airport and aeronautical charges for the industry should also be fully or partially waived,” he said.

“It is critical that these countries still have a viable aviation sector to support the economic recovery, connect manufacturing hubs and support tourism when the COVID-19 crisis is over. They need to act now and urgently before it is too late,” Clifford said.

IATA said based on a scenario where severe restrictions on travel were lifted after three months, followed by gradual recovery, passenger demand could be reduced between 34 percent and 44 percent this year.

In the Philippines, the passenger demand may drop by 36 percent; Thailand, 40 percent; Vietnam, 34 percent; Cambodia, 34 percent; Pakistan, 40 percent; Republic of Korea, 40 percent and Sri Lanka , 44 percent.

“Based on a scenario in which severe travel restrictions last for three months, the Asia-Pacific region as a whole will see passenger demand reduced by 37 percent this year, with a revenue loss of $88 billion,” Clifford said.

“While each country will see varying impact on passenger demand, the net result is the same—their airlines are fighting for survival, they are facing a liquidity crisis, and they will need financial relief urgently to sustain their businesses through this volatile situation,” Clifford said.

IATA expects airlines to post a net loss of $39 billion in the second quarter ending June 2020.

The impact of that on cash burn will be amplified by a $35-billion liability for potential ticket refunds. Without relief, the industry’s cash position could deteriorate by $61 billion in the second quarter, it said.

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