The COVID-19 pandemic could lead most airlines across the world to bankruptcy by May, industry body CAPA (Centre for Aviation) warns.
CAPA said travel restrictions and recommendations issued by countries pose great economic challenges for airlines, and the group urged national governments to coordinate with each other to mitigate the risks.
“By the end of May-2020, most airlines in the world will be bankrupt,” CAPA said in a statement. “Coordinated government and industry action is needed — now — if catastrophe is to be avoided.”
Many airlines have probably been driven into technical bankruptcy already, CAPA said, adding that cash reserves are running low and forward bookings are “far outweighed” by mass cancellations made each time a new government’s recommendation discourages flying.
National governments are also sending “mixed and frequently quite different” messages, with each nation adopting a solution that appears best for itself without consulting neighbors or trading partners, CAPA said.
“When, for example President Trump peremptorily announced the effective cancellation of airline access to most Europeans, he didn’t even advise his European government counterparts in advance, let alone consult with them. Other governments have performed little better,” CAPA said.
Trump made the announcement about the 30-day travel ban from Europe for foreign nationals during an Oval Office address last week.
Amid the outbreak, the U.S. Centers for Disease Control and Prevention (CDC) recommends travelers limit nonessential travel to China, Iran, the United Kingdom, Ireland and most European countries.
CAPA urged national governments to create a framework for managing fallout from the COVID-19 pandemic now, rather than waiting to create a basis to work from.
“Inevitably, once we exit this tunnel — as we will — the world will be a different place; aviation will be no exception,” CAPA said.
Failure to do so, CAPA said, will result in an “unstructured and nationalistic outcome” that will “will reek of nationalism” leaving the airlines that are best-supported by their governments.