The global airline industry may now need a $ 1 trillion bailout

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The global spread of COVID-19 has had a widespread and devastating impact on the aviation industry.

The aviation industry supports $ 2.7 trillion in global GDP. This represents 3.6% of the world’s gross domestic product, and if aviation were a country, it would rank 20th in terms of GDP.

With the entry into force of border restrictions around the world, many airlines have canceled the majority of international flights. A total of 43 airlines have immobilized their entire fleet and many large carriers have canceled up to 96% of scheduled flights.

There are ongoing lobbying calls from aviation organizations and the airlines themselves asking for bailouts and government subsidies to weather the storm.

On March 26, the International Air Transport Association (IATA) reinforced its call for urgent action by European governments to bring financial relief to airlines. IATA has calculated the increase in potential losses to airlines due to continued grounding and uncertainty, with the scenario of potential loss of revenue for European carriers amounting to US $ 76 billion and demand for passengers (measured in passenger-kilometers paid) is expected to be 46% below 2019 levels. IATA estimates that a decline of this magnitude jeopardizes 5.6 million jobs and $ 378 billion of GDP supported by air transport in Europe only.

In the United States, the Airline Passenger Experience Association (APEX) has now called on the government to provide $ 250 billion in airline support to support airlines affected by the groundings.

Airlines For America (A4A) has already called on the government to provide $ 50 billion in support for US carriers and an additional $ 8 billion for freight airlines. IATA has also requested additional $ 150 billion from airline providers who need additional funding.

“Our world must act immediately to protect its global airline industry with a quarter trillion dollars of retroactively remitted taxes and emergency loans to its airlines and suppliers,” said APEX CEO Dr Joe Leader.

With potential direct and indirect support for carriers and suppliers in the United States and the EU potentially totaling more than $ 500 billion, the total global bill for support and bailouts could exceed $ 1 trillion. IATA previously estimated that Asia-Pacific carriers could be responsible for almost half of the losses and the negative impact of global groundings.

In Europe, IATA has, in addition to financial support, called on regulators to provide the following relief measures.

The key priorities in Europe are:

An urgent temporary amendment to the EU passenger rights regulation261. Short-term flexibility is needed immediately. Allowing the use of vouchers instead of refunds, as has been allowed for some tour operators, would give airlines space to repair cash flows.

Provide a package of measures to ensure air cargo operations, including expedited procedures for obtaining overflight and landing permits, exempting flight crew members from 14-day quarantine and removing economic barriers (fees overview, parking fees and time slot restrictions).

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