COVID-19 is hurting Latin American and Caribbean airlines
Colombian airline Avianca recently announced that it had asked to file for bankruptcy in the United States to start a reorganization process due to ‘the speed and dramatic escalation of the impact of the COVID-19 crisis.’
With COVID-19 infections accelerating, the majority of Latin America and Caribbean countries still closed to commercial travel, and Europe imposing travel restrictions, the tourism and aviation industry risks losing millions of jobs and seeing more airlines filing bankruptcy, two leading industry organizations say.
On Thursday, the International Air Transport Association and the World Travel & Tourism Council called on regional governments not to abandon the airline industry in the midst of the global coronavirus pandemic. They also reiterated demands for financial support for regional carriers, and clear restart dates for commercial travel from regional governments.
“We need governments to support and strengthen the restart by quickly implementing the International Civil Aviation Organization’s global guidelines for restoring air connectivity,” said Alexandre de Juniac, director general and CEO of International Air Transport Association.
The push for Latin America and the Caribbean to reopen their airspace comes amid a resurgence of coronavirus infections, which have made the region the new epicenter of the deadly respiratory disease with at least 100,000 new cases being registered a day, the Pan American Health Organization said this week.
Fearing that the number of new cases will not go down for several weeks, many governments have pushed back restarting domestic and international air travel, which tourism and aviation experts say will not help their industries’ recovery.
“This pandemic is affecting five times what was affected in the [2008] financial crisis, which is absolutely traumatic,” said Maribel Rodriguez, a senior vice president for the World Travel & Tourism Council.
Rodriguez, who has been advocating for the removal of travel restrictions, said the tourism-dependent Caribbean risks losing anywhere between 1.6 million and 2 million tourismrelated jobs, while Latin America could lose as many as 6.1 million.
Peter Cerdá, the International Air Transport Association’s regional vice president for the Americas, said that in the last two weeks several regional carriers have applied for financial restructuring under Chapter 11, and many more could do the same.
“The impact the virus is having on the air transportation system is exacerbated by the uncertainty of the dates for the reopening of the operations in some countries coupled with the lack of clear measures to support the sector,” Cerdá said. “This combination is jeopardizing thousands of jobs and contributions to the [gross domestic produce] in our region.”
In March, as the virus began to spread, most countries in the Americas quickly responded by shutting down their land, sea and air borders. In some cases, not even stranded nationals were allowed to return.
The decision undoubtedly bought time and allowed nations to prepare their health systems to confront COVID-19. But it also decimated economies as countries closed schools, imposed 24-hour lockdowns and grounded commercial flights.
Last month, several countries in the Caribbean, where the virus has been mostly contained in the former British colonies, began reopening their airspace. But the majority of borders remain closed in South and Central America, where leaders are continuing to see climbing infections and deaths.
Cerdá said that globally the aviation industry is expected to suffer a net loss of $84.3 billion this year. For Latin America and Caribbean airlines, where there has been a 98.1 percent drop in demand for air travel, the expected loss for airlines is $4 billion.
“For Latin America we now predict that $98 billion of GDP supported by air transport is at risk along with 4.1 million jobs,” Cerdá said. “We are expecting revenue losses of between 52 to 81 percent as compared to 2019 in the many markets.”
A big chunk of that will come from the currently cut off trans-Atlantic market, a key revenue earner for many airlines in the region.
Last week, the European Union finalized a list of countries whose health situation was deemed safe enough to allow residents to enter the bloc after it reopened its airspace.
Only Canada and Uruguay made the cut in the Americas region, while the United Kingdom came up with its own list. The UK’s list consists of its overseas territories and former colonies in the Caribbean.
“Even though the list is reviewed every two weeks, the continued border closures will disproportionately hit airlines based in Latin America and the Caribbean,” Cerdá said. “Each month the EU remains closed translates into a net loss of about $300 million in airline ticket revenues generated by Latin America and Caribbean.”
The continued travel restrictions, both by the European Union and countries in the region, he added, “will not help the badly needed restart process.”
The decision to reopen borders is a tricky one, and one PAHO has said should be guided by data and a country’s ability to quickly respond to a spike in new infections. Citing the fact that the industry has operated more than 800 repatriation flights in the region since March, Cerdá said that there is “no scientific evidence aviation has been a vector of the virus.”
The CDC has advised that air travel does increase a person’s risk of getting COVID-19 because of the cramped conditions on planes, but notes that onboard filtration systems make it harder for viruses to spread. Caribbean nations that have reopened borders to outside travel have all reported seeing new infections attributed to imported cases, which is what led most to suspend air travel in March.
“We knew that the inevitable result would be travelrelated incidents of the virus entering our territory,” U.S. Virgin Islands Governor Albert Bryan Jr. said last month after cases went up following the reopening of the airspace and hotels to tourists.
Still, the International Air Transport Association is insisting that as Latin America continues to be the epicenter of COVID-19 infections, the projections for the aviation industry are getting worse by the day, putting it and the region at a disadvantage compared to other markets around the world.
“Latin America and the Caribbean simply lack viable alternatives such as roads or railroads. Therefore aviation must be allowed to resume as quickly as possible,” Cerdá said.
He added that the necessary guidelines on how aviation could function without becoming a vector to the spread of COVID-19 are outlined in the International Civil Aviation Organization’s guidelines.
“The protocols have been devised with both medical and scientific knowledge and clearly spell out how aviation could once again safely fulfill its role as a catalyst for the social, economic development of the region,” said Cerdá. “However, too many governments are dragging their feet in terms of implementation.”
Cerdá said this week, the airlines’ trade association met with Colombian President Iván Duque Márquez to ask for a specific restart date for domestic operations so airlines can have planning certainty. The country instead is proposing
test flights, which the association said are not enough, and urged for a Sept. 1 date for the commencement of international air flights.
Ecuador, he said, has shown leadership in the restart of flights in the region but the ministry of transport’s decision to postpone a request to remove a 14-day quarantine for travelers is hurting travel.
“We are beginning to see that even with the restart of air travel in Ecuador, people are beginning to stop flying there because of the quarantine measures,” Cerdá said. “We understand the sanitary situation in the country but we hope the Ecuadoran government will listen to the industry and lift the quarantine as soon as possible.”
He also said the Mexican government, which never closed its airports, is reviewing their request for relief measures for airlines.
In Brazil, the Lower House has approved an extension of refunds to stimulate travel and has terminated the $18 international departure tax. The measure must now be voted by the Senate.
“The situation was already difficult coming into the year in Latin America with social, economic, political unrest. It was already going to be a challenging year for the industry; we were hoping to make a small profit as an industry in Latin America,” Cerdá said. “Obviously that has now dissipated with the COVID crisis and we’re now going into the fourth month with many of our countries being closed, the EU imposing travel restrictions for the vast majority of countries in Latin America and obviously, this is having a huge effect on the Latin American carriers.”