COVID-19

Wider economic impact

from air transport collapse

Brian Pearce
Chief Economist
7th April 2020

1
 Worldwide flights were 70% lower at the start of Q2
Further decline possible as restrictions rise in a number of regions
Daily flights, indexed 1st January = 100
160
Number of flights, index to equal 100 1st Jan

140

120

100

80

60 N America

40
Global
20 Asia Pacific
Europe
0

Source: IATA Economics using data from FlightRadar24

 We are forecasting a 70%+ y-o-y fall in RPKs in Q2
Revenue shock similar as lower passenger yields offset by cargo
Worldwide RPKs, % change year-on-year
20%

10%

0%
% change year-on-year

-10%

-20%

-30%

-40%

-50%

-60%

-70%
2020 Q2
-80%
2015 2016 2017 2018 2019 2020 2021

Source: IATA Economics https://www.iata.org/en/iata-repository/publications/economic-reports/covid-19-cash-burn-analysis/

 Cash burn may be over $60 billion in Q2
Some costs cannot be avoided and ticket refunds also burning cash

Cash burn of
$61bn in Q2

Source: IATA Economics https://www.iata.org/en/iata-repository/publications/economic-reports/covid-19-cash-burn-analysis/

 Many airlines running out of cash
Situation at start of this year - median airline only 2 months cash
Balance Sheet Liquidity
(Cash and Equivalents Coverage of Revenues*)
Months Min Max Median
10
9
8
7
6
5
4
3
2
1
0
Africa Asia Pacific Europe Latin America Middle East North America

*Latest available 12 months cumulative revenues Africa, Latin America and the Middle East might not be representative due to small sample size.

Source: IATA Economics using the Airline Analyst https://www.iata.org/en/iata-repository/publications/economic-reports/covid-19-airlines-liquidity-crisis/

 Connecting cities by air will be critical for the recovery
35% of international trade, supply chains, investment, tourism
End-March 2019

Source: IATA Economics using data from FlightRadar24, w/c March 25, 2019
 Connecting cities by air will be critical for the recovery
35% of international trade, supply chains, investment, tourism
End-March 2020

Source: IATA Economics using data from FlightRadar24, w/c March 30, 2020
 Advanced economies depend on supply chains
Rapid air transport links critical for functioning of modern businesses

Source: IATA Economics using an image from wearemoblans.com

 Emerging economies often depend on inbound tourism
The spending and investment driven by tourism industry can be critical

22% Thailand 11% China 9% South Africa

Mexico India 8% Brazil

17% 9%

12% Turkey Vietnam 6% Indonesia

9%

Source: IATA Economics using data from World Travel and Tourism Council, 2019
 The consequences are severe for the wider economy
Not just airlines, also 25 million jobs at risk throughout economies
Jobs supported by air transport at risk due to COVID-19

Asia-Pacific 11.2 m

Europe 5.6 m

Latin America 2.9 m

North America 2.0 m

Africa 2.0 m

Middle East 0.9 m Note: these estimate are based on the full year 2020
impact assessment of a 38% decline in RPKs

Source: IATA Economics

Contacts
economics@iata.org
www.iata.org/economics