The aviation industry in the Gulf region is bracing for a $7 billion financial hit and the loss of up to nearly 347,000 jobs due to disruptions caused by the coronavirus, it was announced on Thursday.
The International Air Transport Association (IATA) said a total of 16,000 passenger flights have been cancelled in the Middle East since the end of January as the outbreak of coronavirus has left the regional aviation industry reeling.
In a bleak warning, IATA said the slump is expected to increase exponentially with the additional measures in different countries to halt the spread of the virus. So far, international bookings in the Middle East are down 40 percent year-over-year in March and April, 30 percent year-over-year in May and June.
Domestic bookings are down roughly 20 percent in March and April, 40 percent in May and June, according to the latest data available.
IATA added that Middle East airlines had lost $7.2 billion revenue as at March 11 while ticket refunds have increased by 75 percent in 2020 compared to the same period in 2019.
Globally, it said up to $200 billion is needed to rescue the world’s airlines during the coronavirus crisis.
How IATA sees Covid-19 impacting Gulf aviation markets:
In Bahrain, the disruptions could result in 1.1 million loss in passenger volumes and $204 million loss in base revenues in Bahrain. The disruptions to air travel could also put at risk about 5,100 jobs in the country. In Kuwait, the disruptions could result in 2.9 million loss in passenger volumes and $547 million loss in base revenues in Kuwait. The disruptions to air travel could also put at risk over 19,800 jobs in the country. In Oman, the disruptions could result in 2 million loss in passenger volumes and $328 million loss in base revenues in Oman. The disruptions to air travel could also put at risk about 36,700 jobs in the country. In Saudi Arabia, the disruptions could result in 15.7 million loss in passenger volumes and $3.1 billion loss in base revenues in Saudi Arabia. The disruptions to air travel could also put at risk over 140,300 jobs in the country. In the UAE, the disruptions could result in 13.6 million loss in passenger volumes and $2.8 billion loss in base revenues in the United Arab Emirates. The disruptions to air travel could also put at risk over 163,000 jobs in the country.
IATA said it is appealing to governments in the Middle East, as part of a worldwide campaign, to provide emergency support to airlines as they fight for survival due to the evaporation of air travel demand as a result of the Covid-19 crisis.
“Stopping the spread of Covid-19 is the top priority of governments. But they must be aware that the public health emergency has now become a catastrophe for economies and for aviation. The scale of the current industry crisis is much worse and far more widespread than 9/11, SARS or the 2008 Global Financial Crisis,” said Alexandre de Juniac, IATA’s director general and CEO.
“Airlines are fighting for survival. Many routes have been suspended in Africa and Middle East and airlines have seen demand fall by as much as 60 percent on remaining ones. Millions of jobs are at stake. Airlines need urgent government action if they are to emerge from this in a fit state to help the world recover, once COVID-19 is beaten,” he added.
He said extensive cost cutting measures are being implemented by the region’s carriers to mitigate the financial impact of Covid-19, adding that with average cash reserves of approximately two months in the region, airlines are facing a liquidity and existential crisis.
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