Airline companies have been shaken by the spread of infections with the new coronavirus. The free flow of people supports the growth of the world economy. Each country must implement support measures to protect the infrastructure of air transportation.
Countries around the world are restricting the flow of people to and from other nations. This must be done to help prevent the spread of infections, but airlines have been forced to suspend most of their international flights.
In the wake of the Sept. 11 terrorist attacks in the United States in 2001, the outbreak of severe acute respiratory syndrome (SARS) in 2003 and the collapse of U.S. investment bank Lehman Brothers in 2008, demand for aviation plummeted and countries extended such measures as loans to help airline companies.
The current situation is an unprecedented crisis that far exceeds such previous cases.
The International Air Transport Association (IATA), a group of airline companies around the world, estimates that revenues from global passenger aviation services will fall 252 billion dollars (about 27 trillion yen) in 2020 due to the spread of the new coronavirus.
Airline companies have a high proportion of fixed costs, such as aircraft depreciation, leasing costs and labor expenses, so declines in revenues will easily lead to going into the red. Many are expected to go bankrupt after failing to survive through such management efforts as restructuring.
If there are many bankruptcies among airline companies, it could hinder the smooth resumption of flights after the spread of infections has subsided. A situation in which the global movement of people and goods is disrupted and economic recovery is adversely affected must be avoided. Bold measures will be required.
The U.S. government will set aside more than 50 billion dollars to support airlines as part of a 2.2 trillion dollars economic package in response to the outbreak.
In Asia, Singapore Airlines plans to receive more than 1 trillion yen from such organizations as a government-affiliated fund to strengthen its financial base.
Japanese airlines are in the same predicament. All Nippon Airways and Japan Airlines will cancel nearly 90% of their international flights in April.
Peach Aviation, a Japanese low-cost carrier, will suspend all international flights for the time being. LCCs are small in business scale. The impact of such a move on the company remains to be seen.
According to the Scheduled Airlines Association of Japan, which consists of domestic airline companies, the decrease in revenue in the period from February to May is expected to reach 500 billion yen, exceeding the 300 billion yen drop after the collapse of Lehman Brothers.
ANA and JAL will cut executives' pay. ANA will temporarily lay off about 6,400 flight attendants. However, ANA's financial position is still severe, and it has asked the Development Bank of Japan for a 300 billion yen loan. The airline companies are urged to do their utmost to continue their businesses and maintain employment.
The government is considering delaying the payment of airport user fees and allowing the deferment of the aviation fuel tax. Measures to back up airline companies' own efforts to help themselves are urgently needed.
-- The original Japanese article appeared in The Yomiuri Shimbun on April 12, 2020.
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