Thousands of aircraft of all types, makes and sizes are grounded. They cannot fly. Exceptional cases of some military, humanitarian and cargo flights are the only figures on air traffic controllers’ radars in the world: On April 15, 2019, there were 15,523 aircraft flying. On April 13, 2020 there were only 3,908 aircraft.
The planet will need to revive air transport and it will not be an easy task. It will require coordinated efforts from all actors in the value chain at the local, regional and international levels. There will be two stalwarts for this process to work: government aid to airlines and passenger’s confidence in flying back again that could be delayed as happened in 2001 after the 9/11 attacks.
Recently, the US financial firm JPMorgan Chase, in its annual conference on air transport released worrying information. Several international airlines had a few months to live if their planes were still on the ground. In the case of Latin American airlines, Avianca was forecast three months; to LATAM four months; to Azul six months and to COPA ten months, among others.
Added to this is that some of the main aircraft leasing companies in the world began to lose their patience and asked their aircraft to return to various airlines such as Interjet in Mexico, reducing their ability to react once this global health crisis is overcome, which prevents normal air travel. Aircraft lessors should also be quarantined.
Some airlines in the region have already asked their governments for help with negative results, as has happened in Chile, Brazil & Mexico. It has not been enough to license or advance vacations or retirement to part of its workforce. According to IATA data, about 25 million people worldwide depend on the aviation industry directly, which requires a lot of fresh money daily to be in the air and competing for a piece of the market that allows them to survive. There is a belief that it is a very rich industry, but deep down it is an industry with an almost infinite need for cash flow and daily capital to stay on the air.
And, given the limitations that all governments now have in terms of financial resources to deal with the ravages of the pandemic, there is little room for maneuver to support large companies such as airlines without affecting the social component demanded by small and medium-sized companies in these cases too.
Therefore, it is not clear how the airlines will be when the aid can arrive and in what way, in the midst of this economic turmoil, since they are not even able to take advantage of the low fuel prices that are experienced at this time. For now, some cargo and humanitarian flights paid by governments operate marginally. What is certain is that air transport, at least in Colombia, is considered a legal public interest and therefore will have an opportunity to survive.
The opinions expressed in this guest editorial are solely those of the contributor and do not necessarily represent the views or positions of Finance Colombia, its publishers, journalists or staff.