Govt mulls relief for hard-hit airlines

Relief measures for airlines affected by the ongoing Covid-19 outbreak will be considered at a meeting of economic ministers later today, after the International Air Transport Association (Iata) sounded the alarm over revenue losses due to the outbreak.

Transport Minister Saksayam Chidchob said the ministry has forwarded its recommendations, which will be discussed in today’s meeting. If approved, he said, the measures would take effect immediately.

While most of the help are expected to come from transport-related government agencies, Mr Saksayam said if the agencies do not have the budget to implement the measures, then the government will step in as required.

The measures which will be looked at today are likely to include financial assistance, pushed by 17 air carriers — mostly budget airlines — which have been battered by losses due to dwindling passenger traffic since the onset of the outbreak.

Mr Saksayam said airlines are urging the government to reduce or waive airport fees — which include take-off, landing and parking fees — as well as fees for office and equipment rental.

The minister said top executives from the 17 airlines, who met with him on Wednesday, expect the downturn will take at least a year to recover from, as international passenger traffic to Thailand has slumped by 35% since the outbreak began.

In its projection, Iata said cuts in scheduled passenger services will cause losses of between US$63-113 billion (1.9-3.6 trillion baht).

“In a little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse,” said Alexandre de Juniac, Iata’s CEO and director-general.

“Many airlines are cutting capacity and taking emergency measures to reduce costs. Governments must take note.”

As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation, said the Iata CEO, before adding that such measures are needed in “extraordinary times”.

The Iata has estimated the potential impact on passenger revenues based on two possible scenarios — limited spread and extensive spread.

The limited spread scenario sees markets with more than 100 confirmed Covid-19 cases (as of March 2) experiencing a sharp downturn followed by a V-shaped recovery profile.

The markets accounted for in this scenario and their anticipated fall in passenger numbers are China (-23%), Japan (-12%), Singapore (-10%), South Korea (-14%), Italy (-24%), France (-10%), Germany (-10%), and Iran (-16%).

Globally, this fall in demand translates to an 11% worldwide passenger revenue loss equal to $63 billion. China would account for some $22 billion of this total, according to Iata.

Under the scenario where the spread extends to all markets which currently have 10 or more confirmed Covid-19 cases (as of March 2), a 19% loss in worldwide passenger revenue is forecast, which equates to $113 billion.