CAPA warns of airlines going bankrupt in 10 weeks all virus casualties

SYDNEY's Centre for Aviation (CAPA) says coordinated government and industry action could prevent many of the world's airlines from going bankrupt in just 10 weeks

22 March 2020 - 19:00

SYDNEY's Centre for Aviation (CAPA) says coordinated government and industry action could prevent many of the world's airlines from going bankrupt in just 10 weeks.

The warning prompted the International Air Transport Association (IATA) to urge governments to facilitate freighter and freight-only flights.

IATA director general Alexandre de Juniac, former Air France CEO, urged governments to 'take urgent measures to ensure vital supply lines remain open, efficient and effective', reports London's Loadstar.

IATA outlined five ways in which they could support the industry, including to exclude air cargo operations from any coronavirus-related travel restrictions; and to ensure that standardised measures are in place so that air cargo can continue to move around the world with minimal disruption.

In addition, the association also wants to exempt air cargo crew members who do not interact with the public from 14-day quarantine requirements; support temporary traffic rights for cargo operations where restrictions may apply; and remove economic impediments, such as overfly charges, parking fees and slot restrictions.

Said the European Regions Airlines Association (ERA): 'Legislation, directives and guidance aimed at air passenger operations and the protection of air passengers on commercial flights, does not specifically exempt cargo flights and cargo flight crews.

'At this moment, some states require that when a cargo flight returns to a country following minimal ground time as part of the turnaround process in a high-risk area, even if the crew do not leave the aircraft, effectively never leaving the territory of the aircraft registration and never entering the country in which they landed, they will be subject to 14 days of mandatory isolation,' said the ERA statement.

'If this is to continue, airlines will quickly run out of flight crew to continue operations,' it warned.

CAPA explained that some airlines may already be technically bankrupt - or 'at least substantially in breach of debt covenants', while cash reserves, it said, 'are running down quickly'.

CAPA said governments were sending mixed messages and there was 'little instinct to act cooperatively'.

'Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbours or trading partners,' it noted, adding that US President Donald Trump's unilateral overnight travel ban was a case in point.

CAPA blames foreign ownership rules, unionisation and cabotage rules for what is now a 'fragmented and largely unviable airline industry'.

'As things stand, the likely tepid response to the airline crisis will equally be fragmented and nationally based. It will consist mostly of bailing out selected national airlines.

'If that is the default position, emerging from the crisis will be like entering a brutal battlefield, littered with casualties.' And it said, this could be a unique time to re-write the rules.


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