IATA says coronavirus crisis warrants tax relief for airlines

Citing potential revenue losses of as much as $113 billion
due to the Covid-19 coronavirus outbreak, IATA called on governments to give
the aviation industry some relief on taxes, charges and slot allocation. 

“The turn of events as a result of Covid-19 is almost
without precedent,” IATA CEO Alexandre de Juniac said in a statement. “In
little over two months, the industry’s prospects in much of the world have
taken a dramatic turn for the worse. … This is a crisis.” 

IATA predicts 2020 global revenue losses for the passenger
aviation industry of between $63 billion and $113 billion, depending on how
long the outbreak lasts. The lower end assumes Covid-19 would be contained in
current markets with over 100 cases as of March 2, and the high end assumes a
broader spread of the virus. 

IATA’s previous analysis put lost revenues at $29.3 billion
based on Covid-19 being largely confined to markets associated with China. 

Financially, IATA said the higher end of its estimate would
be on a scale equivalent to what the industry experienced in the global financial
crisis in 2008. Citing airline capacity cuts and emergency measures to reduce
costs, de Juniac said, “Governments must take note.” 

“Airlines are doing their best to stay afloat as they
perform the vital task of linking the world’s economies. As governments look to
stimulus measures, the airline industry will need consideration for relief on
taxes, charges and slot allocation. These are extraordinary times,” he said. 

Airline share prices have fallen nearly 25% since the
outbreak began, IATA added, some 21 percentage points greater than the decline
that occurred at a similar point during the SARS crisis of 2003. 

The $63 billion in revenue loss at the lower end of the
prediction assumes China would account for about $22 billion of the total and
that markets associated with Asia, including China, would account for $47
billion of this total. In what IATA calls the “extensive spread” scenario,
based on markets that had 10 or more confirmed Covid-19 cases as of March 2,
the outcome is a 19% loss in worldwide passenger revenues, which equates to
$113 billion. 

IATA said the drop in oil prices would mitigate some of the
damage by cutting costs up to $28 billion on the 2020 fuel bill. However, IATA
said those savings “would provide some relief but would not significantly
cushion the devastating impact that Covid-19 is having on demand.”

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