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Covid-19 disruptions to cost airlines approximately £7 billion

Covid-19 disruptions to cost airlines approximately £7 billion
Covid-19 disruptions to cost airlines approximately £7 billion

A slower than expected global COVID-19 vaccine rollout as well as widescale failure to get the virus under control would reportedly cost airlines approximately $10 billion (£7.2 bn) more than previously prophesied, claims IATA, the organization representing global airlines. 

The warning from IATA came as Michael O’Leary, chief executive of Ryanair cautioned that there might be seismic cut in the capacity all across the airlines industry owing to the global pandemic, which includes nearly 25% less flights in Europe.

O’Leary stated that travel from the United Kingdom to the EU will become much more costly as well as cumbersome because of Brexit, whereas leisure travel will not arrive to normal until 2023.

New director general of IATA and former boss of British Airways’ parent company IAG, Willie Walsh, complained against the PCR COVID tests cost now needed for air travel and also criticized the decision of the government to charge VAT on the products.

As per the new IATA forecasts, the aviation industry is now likely to lose approximately $48 billion during 2021, almost above a quarter more than the $38 billion it estimated in December 2020.

International Air Transport Association, pointed to the slow-going vaccine rollout in countries including Germany and France, and in emerging markets for the extreme losses, combined with the increase of novel virus variants and ongoing restriction on international travel limitations.

Airlines have surged their numbers of cargo flights during this global crisis, a trend which is anticipated to continue, but IATA cautioned that this might not cover the slump in passenger travel. This means that the total operating revenues are projected to reach just 55% of 2019 levels during the current year.

Regardless of the continuing travel restrictions, IATA estimates that nearly 2.4bn people would travel by air this year.

The national Treasury will be considering as to how it can lessen the travel cost, while making sure that it is as safe as possible. This might include low-priced tests being used when travelers return home and the government’s possibility of providing pre-departure tests.

Source credit: https://www.theguardian.com/business/2021/apr/21/covid-to-cost-airlines-7bn-more-than-predicted

 

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for newsorigins.com, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.