The forced landing of Latin American airlines

The International Air Transport Association, IATA, predicted a 49% drop in passenger mobilization this year in the region due to Covid19, a dramatic drop considering that before the pandemic, the dynamics of the sector were advancing frankly.

For airlines based in Latin America and the Caribbean this translates into a drop in passenger revenue of USD 18 billion in 2020 (the estimate of March 24 was USD 15 billion), explains a report by the Asociation.

Breaking down the latest estimate by country shows the following effects on passenger revenue by market (all passenger traffic to and from a market) and the corresponding direct and indirect job losses by country.

Following this scenario, IATA requests that governments consider the following relief measures:

  1. Direct financial support to passenger and air cargo carriers to compensate for the drop in income and lack of liquidity due to travel restrictions as a result of COVID-19.
  2. Loans, loan guarantees and support to the corporate bond market by governments and central banks. The corporate bond market is a vital source of financial support, but it is necessary to expand the eligibility criteria set by central banks and have the guarantee of governments to facilitate access to a greater number of airlines.
  3. Tax relief. Reimbursement of payroll taxes paid to date and / or the extension of payment terms during 2020, together with the temporary exemption of air ticket fees and other charges applied by governments.

“The impact of this crisis on airlines in the region continues to be brutal. Passenger traffic has stopped and sources of revenue have been exhausted. No cost cut will save airlines from a liquidity crisis that is imminent and will be severe, with negative effects on countries’ economies and employment. Governments must act quickly, “concludes the report.

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