IATA states that many airlines face ‘immediate and critical liquidity challenge’ in the future due to the Covid-19 pandemic. Credit: Pete Linforth.

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Based on the recent developments regarding the Covid-19 pandemic, The International Air Transport Association (IATA) has updated the impact assessment on airline passenger revenues and RPKs.

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It stated that the outbreak has increased more than the scenario estimated by IATA earlier this month.

Due to the increasing number of confirmed cases and deaths, many governments have implemented travel restrictions that have led to a decrease in demand for airlines.

It is estimated that around 8,500 passenger aircraft have been grounded, which accounts to 1/3 of the total passenger fleet around the world.

The estimation chart estimates a three-month-long ‘lockdown’ of the global air travel market, along with a gradual U-shaped demand recovery.

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IATA stated: “Notwithstanding some recent signs of some upturn in the China domestic market, for the industry as whole we expect the recovery process will be slower than the six to seven month timeframe observed in past epidemics.

“The extension of recovery time reflects both the staggered timing of the start of the virus outbreak in different regions and the expected global recession, which will continue to impact passenger demand even after the border restrictions are lifted.”

As per the assumptions, passenger revenues are expected to decrease by $252bn compared to last year while the RPKs will decrease by 38%.

These figures state the ‘immediate and critical liquidity challenge’ that will be faced by airlines in the future.

As most airlines have lower than three months of liquidity, survival during this period is not expected to be easy for most of the airlines.