Enterprise

Global airlines book Sh13trn loss as Covid grounds planes

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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • The airline industry recorded a total loss of $126 billion dollars in 2020 as the sector grappled with the effects of the Covid-19, which saw passenger aircraft grounded worldwide, posting the worst year on record.
  • The International Air Transport Association (IATA) said in the recently released World Air Transport Statistics (WATS) that the losses were occasioned by a sharp decline on number of passengers, which was down by 60.2 percent from the previous year.
  • The statistics show that passengers who travelled by air in the review period were 1.8 billion from 4.5 billion in corresponding period in 2019.

The airline industry recorded a total loss of $126 billion dollars in 2020 as the sector grappled with the effects of the Covid-19, which saw passenger aircraft grounded worldwide, posting the worst year on record.

The International Air Transport Association (IATA) said in the recently released World Air Transport Statistics (WATS) that the losses were occasioned by a sharp decline on number of passengers, which was down by 60.2 percent from the previous year.

The statistics show that passengers who travelled by air in the review period were 1.8 billion from 4.5 billion in corresponding period in 2019.

“At the depth of the crisis in April 2020, 66 percent of the world’s commercial air transport fleet was grounded as governments closed borders or imposed strict quarantines. A million jobs disappeared. And industry losses for the year totaled $126 billion,” said Willie Walsh, IATA’s Director General.

Africa suffered a 68 percent loss of passengers while the Middle East region suffered the largest proportion of loss in passenger traffic with a drop of 71.5 percent in Revenue Passenger kilometres (RPKs) versus 2019, followed by Europe at 69.7 percent.

The agency says air connectivity declined by more than half in 2020 with the number of routes connecting airports falling dramatically at the outset of the crisis and was down more than 60 percent year-on-year in April 2020.

Kenya opened its airspace for international airlines on August last year, having been grounded in April, while the domestic ones had resumed a month earlier.

The aviation sector is not yet out of the woods as the airlines continue to stare at a blink future with another round of the Covid-19 variant that has seen carriers suspend flights or reduce frequencies to some of their destinations.

Health experts have warned that the Delta variant that was first discovered in India — is on track to become the most dominant version of the coronavirus worldwide with the World Health Organisation announcing that it has been detected in at least 92 countries.

Just last month, Kenya Airways announced it has cut its frequencies to Uganda because of high number of Covid-19 cases , leading to a total lockdown by the authorities.

In June, Emirates Airline suspended passenger flights from Uganda to Dubai until further notice, responding to a UAE government directive which stopped Ugandans travelling to the region. Rwanda Air too suspended flights to and from Entebbe International Airport.

The variant will hamper summer bookings, which forms the bulk of airlines earnings in a given year due to high demand for travel.

Sharp decline on summer bookings saw Kenya Airways loss nearly triple to Sh36.2 billion in the year ending December 2020 as the carrier sank deeper into the red following a slump in passenger numbers occasioned by Covid-19.

IATA, however, said cargo remains a vibrant business for airlines in 2021 as the strong economy and restocking is driving an increase in share of world trade, with 13.1 percent growth in volumes, which is higher than the World Trade Organisation forecast growth for global trade aof eight percent.

Executives at the Kenya Airways, RwandAir and Uganda Airlines all have stated that the business environment is challenging, having t seen a rise in costs, cutbacks in capacity and a revision of business projections to adjust to the new market realities.