IATA estimates that airlines will burn through $77 billion in cash during the second half of 2020. This equates to $13 billion a month or $300,000 per minute. Moreover, the slow recovery in air travel means the industry will continue to experience cash burn in 2021, at an average rate of $5 to $6 billion per month. The industry is not expected to turn cash positive until 2022.

Airlines continued to lose money during this year’s disastrous spring and summer. And with no timetable for governments to reopen borders without travel-killing quarantines, a year-end holiday season bounce is unlikely.

IATA therefore called for additional relief measures, including financial aid that does not add more debt to the industry’s balance sheet. To date, governments around the world have provided $160 billion in support, including direct aid, wage subsidies, corporate tax relief, and specific industry tax relief, including fuel taxes.

“We are grateful for this support, which is aimed at ensuring that the air transport industry remains viable and ready to reconnect the economies and support millions of jobs in travel and tourism,” said Alexandre de Juniac, IATA’s Director General and CEO. “But the crisis is deeper and longer than any of us could have imagined. And the initial support programs are running out. We must ring the alarm bell again. If these support programs are not replaced or extended, the consequences for an already hobbled industry will be dire.


“Government support for the entire sector is needed,” he continued. “The impact has spread across the entire travel value chain including our airport and air navigation infrastructure partners who are dependent on pre-crisis levels of traffic to sustain their operations. Rate hikes on system users to make up the gap would be the start of a vicious and unforgiving cycle of further cost pressures and downsizings. That will prolong the crisis for the 10% of global economic activity that is linked to travel and tourism.”

There will be little appetite among consumers for cost increases. In a recent IATA survey, some two thirds of travelers indicated that they would postpone travel until the overall economy or their personal financial situation stabilizes.

Credit | iStock
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