This Week in Aviation: IAG “burning through cash”, as UK introduces two-week quarantine for foreign travelers

IAG is “burning through cash”, UK carriers predicted to lose $26.1 billion in revenue and UK Government imposes two-week quarantine on international arrivals.

The remarks by William Walsh, CEO of IAG – the parent company of British Airways – come as the UK aviation industry faces more potential disruptions with the coronavirus pandemic continuing to make its presence felt in the industry.

The aviation sector was discombobulated by the UK Government’s announcement that all travelers entering the UK, will face a two-week quarantine. In response it said that UK airlines will face a substantial reduction in demand, both consumer and business, as passengers may avoid flying to the UK.

However, in recent days, Government ministers have said that there may be exemptions for France and Ireland, which has, in turn, prompted a backlash from E.U. bigwigs.

A significant reduction in demand would damage an already embattled Aviation industry, which contributes more than $50.3 billion to the UK economy and produces 661,200 jobs.

Looking at Europe as a whole, IATA (International Aviation Transport Association) recently produced some scenario modelling based on “severe travel restrictions lasting for 3 months, with a gradual lifting of restrictions in domestic markets, followed by regional / intercontinental travel.”

This analysis showed that across Europe, a 90% collapse in air traffic would put more than 6.7 million jobs at risk and lead to a negative GDP of $452 billion across the continent.

In this scenario, European carriers would lose $89 billion, with the UK leading the way, accounting for $26.1 billion. In addition, UK will see 140 million fewer passengers in 2020.

“Every job created in aviation supports another 24 jobs in the wider economy”, said Rafael Schvartzman, IATA’s Regional VP for Europe.

UK Trade bodies such as Airlines UK, which represent UK carriers, have called on the Government to implement a series of measures including a temporary suspension of air passenger duty.

Alongside the economic problems, the most significant challenge that many regulators, airlines, airports and bodies are calling on Governments to overcome, is to ensure coordinated standards when international travel takes off again.

This so called “return to flight” will be discussed in the coming months with many proposals mooted such as allowing passengers from low-risk countries to travel freely alongside the necessary safety measures to be employed across airports and on-board aircraft.

Post Date: 14/05/2020

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