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Air travel under pressure as U.S. restricts European carriers

By Wole Oyebade
13 March 2020   |   3:59 am
United States’ decision to restrict flights from Europe, as part of measures against coronavirus spread, has placed the global air travel industry under intense pressure.

• Prepare for broad economic consequences, IATA warns govts

United States’ decision to restrict flights from Europe, as part of measures against coronavirus spread, has placed the global air travel industry under intense pressure.

The International Air Transport Association (IATA) in a reaction said its members would continue to support governments in their efforts to contain the spread of covid-19. But at this time of extreme pressure on the industry, “governments should prepare for the broad economic consequences of these actions, respond quickly to the financial frailty of airlines, and follow World Health Organisation (WHO) recommendations.”

President Donald Trump said he would significantly restrict travel from Europe to the U.S. for the next 30 days, the most far-reaching measure yet in the administration’s efforts to combat the spread of coronavirus.

Trump, speaking Wednesday evening from the Oval Office, said the restrictions, which won’t apply to the U.K., will go into effect Friday at midnight.

He blamed the European Union for not curbing travel from China in the early days of the outbreak, and credited his own measures with having limited the number of cases in the U.S.

IATA’s Director General and Chief Executive Officer (CEO), Alexandre de Juniac, yesterday said these are extraordinary times and governments are taking unprecedented measures.

“Safety—including public health—is always a top priority. Airlines are complying with these requirements. Governments must also recognise that airlines—employing some 2.7 million people—are under extreme financial and operational pressures. They need support,” de Juniac said.

When taking such measures, IATA urged governments to prepare for the adverse economic impact that they will cause. The dimensions of the US-Europe market are enormous.

In 2019, there was a total of around 200,000 flights scheduled between the United States and the Schengen Area, equivalent to around 550 flights per day. There were around 46 million passengers, roughly equivalent to 125,000 travelers every day.

While the U.S. measure recognises the need to continue to facilitate trans-Atlantic trade, the economic fallout of this will be broad.

“Governments must impose the measures they consider necessary to contain the virus. And they must be fully prepared to provide support to buffer the economic dislocation that this will cause. In normal times, air transport is a catalyst for economic growth and development. Suspending travel on such a broad scale will create negative consequences across the economy. Governments must recognise this and be ready to support,” de Juniac said.

Airlines are already struggling with the severe impact that the covid-19 crisis has had on their business. On 5 March 2020, IATA estimated that the crisis could wipe out some $113 billion of revenue. That scenario did not include such severe measures as the U.S. and other governments , including Israel, Kuwait, and Spain, have since put in place.

The U.S. measures will add to this financial pressure. The total value of the U.S.-Schengen market in 2019 was $20.6 billion. The markets facing the heaviest impact are U.S.-Germany ($4 billion), U.S.-France ($3.5 billion) and U.S.-Italy ($2.9 billion).

“This will create enormous cash-flow pressures for airlines. We have already seen Flybe go under. And this latest blow could push others in the same direction. Airlines will need emergency measures to get through this crisis.”

“Governments should be looking at all possible means to assist the industry through these extreme circumstances. Extending lines of credit, reducing infrastructure costs, lightening the tax burden are all measures that governments will need to explore. Air transport is vital, but without a lifeline from governments we will have a sectoral financial crisis piled on top of the public health emergency,” the CEO said.

WHO continues to advise against the application of travel or trade restrictions to countries experiencing outbreaks. On 29 February 2020 the WHO issued revised guidance which included the following:

“Travel measures that significantly interfere with international traffic may only be justified at the beginning of an outbreak, as they may allow countries to gain time, even if only a few days, to rapidly implement effective preparedness measures. Such restrictions must be based on a careful risk assessment, be proportionate to the public health risk, be short in duration, and be reconsidered regularly as the situation evolves.

“We urge the US and other governments that have placed travel restrictions to follow the WHO guidance. This is fast evolving. Health and safety are the top priorities for governments and the air transport sector. But the effectiveness and necessity of travel restrictions must be continuously reviewed,” de Juniac said.