AIRLINES worldwide will likely burn an estimated US$75-95 billion in cash reserves this year, with the continued delay in recovery of the global tourism industry.
The estimate was put forward by the International Air Transport Association (Iata) in its recent presentation to Tourism Secretary Bernadette Romulo Puyat, as it proposed the adoption of a digital solution to hasten the reopening of international tourism. The figure was much worse than the $48-billion cash burn it projected in December 2020.
Iata cited the 85.6-percent fall in international passenger demand in January 2021 versus January 2020, with Asia Pacific recording the “steepest decline of 94.6 percent for the seventh consecutive month,” among the reasons for its updated forecast for 2021.
Budget carrier Cebu Pacific has reported losses amounting to P22 billion in 2020 while legacy carrier Philippine Airlines has recorded P28.85 billion in losses as of September 2020, due to the collapse in passenger travel.
From January 2020 to January 2021, Iata, using data from the Oxford University, showed international travel restrictions were up, along with domestic restrictions. Of all regions, Asia-Pacific nations had the most restrictions, indicating border closures to some regions, followed by Europe, Central and South America, North America, and Africa and the Middle East.
This reflected the recent paper of the United Nations World Tourism Organization that 32 percent of 217 destinations worldwide, were now closed to international tourism, as new Covid-19 variants emerged. (See, “PHL among 69 places ‘closed’ by Covid,” in the BusinessMirror, April 16, 2021.)
Encouraging trends, but ‘headwinds’ still
In the Iata worldwide survey, however, 57 percent of passengers said they were “ready to travel in two months or less when pandemic is contained,” and 72 percent “want to travel to see family and friends.”
While these travel trends were encouraging, Iata underscored that there were still some “headwinds” — 84 percent of those they surveyed said they “won’t travel if there is a chance of quarantine.” In fact, 66 percent believe quarantine “isn’t necessary if a person has been vaccinated for Covid-19,” while 65 percent say “quarantine isn’t necessary if a person tests negative for Covid-19.”
In places like Hong Kong, Singapore and Japan, however, passengers are tested upon arrival but are still required to quarantine for 14 days. Within that period, they are required to take another Covid test.
Iata’s survey also showed that 56 percent of the passengers said they will postpone travel until the economy stabilizes, but this was lower compared to survey results in September 2020 where 65 percent of respondents said this.
When asked about mobile applications, 89 percent said, “Governments must standardize vaccinations/testing certifications so everyone plays by the same rules,” and 85 percent “support a secure system to manage health credentials without fraud.” Of total respondents, 80 percent said they will use a secure mobile app “as soon as it is available,” and 78 percent said they “will only use an app if I have full control of my vaccine/test data.”
Iata proposed the use of its Travel Pass, a digital solution that “both travelers and governments can trust.” The mobile app, which can be integrated into a passenger’s airline app, has already been endorsed by the Department of Tourism and the private sector for adoption. (See, “DOT, private sector back use of Iata Travel Pass,” in the BusinessMirror, April 8, 2021.)
Singapore Airlines, Qatar Airways, and Qantas Airways are already pilot-testing the Travel Pass, while about 40 carriers are in various implementation steps for the app.
Iata is the global association of airlines worldwide with 290 members, which represent 82 percent of global air traffic.
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