Government Intervention, Bilateral Cooperation Key To Aviation Sector’s Recovery, IATA, Expert Warn

Babajide Okeowo
Writer

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With revenue loss hovering above $84 billion in 2020 due to the COVID 19 pandemic, the International Air Transport Association (IATA) has revealed that if the aviation sector is to recover in the second half of 2020, bilateral openings of markets and government intervention will be required.

According to Brian Pearce, Chief Economist of IATA in an interview with CNBC monitored by The New Diplomat a total of $200 billion in global government support may be needed.

“We’re really only just starting to see countries negotiating bilateral openings of markets. For example, the Trans-Tasman bubble between Australia and New Zealand, China, and Singapore, as well as China and Korea. It will be enough to kick start the airline industry in some countries. For many airlines, they do depend on international air travel” he said.

Similarly, Keith Mason, head of the Centre for Air Transport Management at Cranfield University in a separate interview reiterated the key role that government has to play in the survival of airlines.

“Government aid will be important in ensuring the continuity of airlines. We’re going to see a consolidation in the market where airlines that are fully independent are struggling to survive, and are going to go out of business,” he said.

Recall that not too long ago, the airline industry was preparing for a surge in passengers, with IATA forecasting 8.2 billion air travelers by 2037.

But in April, air travel declined 98% from last year as countries closed their borders in efforts to stem the coronavirus pandemic.

“We think airlines are going to probably lose an unprecedented $84 billion in 2020” Pearce had disclosed during the interview.

The coronavirus pandemic’s financial impact is also projected to leave the world with a smaller airline industry. That, in turn, could drive up prices and weaken demand.

While international travel will likely remain volatile for now, countries like China, the U.S., and Indonesia have resumed domestic air travel.

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