The Centre for Aviation, part of the Aviation Week Network (CAPA), a market intelligence firm for the aviation and travel industry, on Monday predicted that most airlines in the world will be bankrupt due to the coronavirus outbreak that has severely impacted the industry.
According to a report on CAPA’s official website, the organisation said that coordination between the governments and the industry is required to save it. “By the end of May-2020, most airlines in the world will be bankrupt. Coordinated government and industry action is needed – now – if catastrophe is to be avoided.”
“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” the report said.
Airline companies are one of the most affected due to the pandemic as many countries have isolated themselves and banned the entry of foreigners in the country. Governments have also asked people to avoid unnecessary domestic travel in order to prevent the virus from spreading.
“Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon,” the report further added.
Quoting the World Travel & Tourism Council (WTTC), CAPA said that up to 50 million jobs in the travel and tourism sector are at risk due to the COVID-19 pandemic, adding that global travel could be adversely impacted by up to 25% in 2020, equivalent to the loss of three months of global travel.
The organisation also said that governments are not thinking about the airlines while attempting to contain the virus.
“While governments are grappling with the health challenges of coronavirus, it is clear that there is little instinct to act cooperatively. Messages are mixed and frequently quite different. Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbours or trading partners.” the report said.
At least 145 countries are affected by the pandemic. After China, Italy is the second most affected country followed by Iran and South Korea.