Wow: COVID-19 Expected To Cost All Airlines More Than $200 Billion

IATA has today released its latest market outlook for the global aviation industry. IN total, it forecasts that the industry will have lost more than. $200 billion by the end of 2022. Losses are slowing, but are yet to stop entirely. IATA further warns that proposed price increases tabled by airports and air navigation service providers could stall the recovery.

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IATA predicts a total loss to the industry in excess of $200 billion. Photo: Getty Images

Losses set to slow

Everyone knew that COVID was going to be tough on the airline industry, but just how tough remained to be seen. Right at the start of the crisis, the International Air Transport Association (IATA) predicted that passenger revenues would fall by 55% in 2020 – that turned out to be something of an optimistic outlook.

By October 2020, IATA’s research showed that airlines worldwide were burning through a staggering $300,000 a minute. In November, the association revised its loss forecast for the industry from its previous assessment of $84.3 billion to $118.5 billion for the year. Despite the help some airlines had received by then, IATA was quick to point out that more would be needed to keep some carriers afloat.

IN 2021, IATA hoped to see an easing of the critical financial situation. It predicted a $47.7 billion loss for 2021, and hoped to even see some airlines turning profitable before the end of the year. Today, the association has released its latest outlook for the industry.

Now, the airline believes that the full-year loss will be closer to $52 billion for 2021. Not only has this been revised upwards, but the final figures for 2020 are in – the industry lost $137.7 billion. On top of these estimates, the losses are forecast to continue, with $11.6 billion predicted for 2022.

Wow: COVID-19 Expected To Cost All Airlines More Than $200 Billion
Losses are predicted to slow, but will still be in excess of $10 billion in 2022. Photo: Dubai Airports

While things are moving in the right direction year on year, it’s clear that COVID has been incredibly costly. All in, total industry losses from 2020 to 2022 tally up to $201 billion.

Willie Walsh, IATA’s Director General, commented,

“The magnitude of the COVID-19 crisis for airlines is enormous. Over the 2020-2022 period total losses could top $200 billion. To survive airlines have dramatically cut costs and adapted their business to whatever opportunities were available. That will see the $137.7 billion loss of 2020 reduce to $52 billion this year. And that will further reduce to $12 billion in 2022. We are well past the deepest point of the crisis. While serious issues remain, the path to recovery is coming into view. Aviation is demonstrating its resilience yet again.”

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Infrastructure cost increases ‘outrageous’

While the industry is slowly crawling back towards profitability, IATA was quick to highlight a potential Sword of Damocles hanging above the head of the recovery. The association wanted that planned increases in charges by airports and air navigation service providers (ANSPs) could stall recovery and damage international connectivity.

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Heathrow has tabled a 90% increase in charges. Photo: Heathrow Airport

Specifically, airports and ANSPs have tabled charge increases that total $2.3 billion. Further increases could be 10 times this number, if these are granted, IATA warned. Notably, London’s Heathrow Airport has reportedly pushed to increase charges by over 90% in 2022, while Schiphol has requested to increase charges by 40% over the next three years.

Walsh commented,

“Today I am ringing the alarm. This must stop if the industry is to have a fair opportunity at recovery.   Infrastructure shareholders, governmental or private, have benefited from stable returns pre-crisis. They must now play their part in the recovery. It is unacceptable behavior to benefit from your customers during good times and stick it to them in bad times. Doing so has broad implications. Air transport is critical to support economic recovery post pandemic. We should not compromise the recovery with the irresponsibility and greed of some of our partners who have not addressed costs or tapped their shareholders for support.”

IATA warns that these and other infrastructure cost hikes could serve to undo all the good work that’s been done by airlines in reducing their cost burdens.

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