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None of the Gulf and Middle East airlines will be spared in the current downturn, which is why government aid by way of new funds would be vital. Image Credit: Gulf News Archive

Dubai: Middle East arilines are heading into $7.2 billion in lost revenues after they drastically reduced services due to the coronavirus outbreak.

as many as 16,000 flights have been cancelled in the region since January end, and with that billions of dollars in revenue opportunities. Cancellations are expected to increase exponentially in days to come as more countries restrict impose travel restrictions and close their borders, said International Air Transport Association (IATA) in a new update.

“The airline business is taking a huge hit in the Middle East. It’s as simple as that, and I’m not playing with words. We are struggling, we are suffering, we are bleeding,” said Mohammad Ali Al Bakri, regional vice-president.

Hurting jobs

Al Bakri said that in the UAE alone, travel disruptions could reduce passenger volumes for airlines by 13.6 million. Local airlines also risk losing $2.8 billion in base revenues.

The disruptions put around 163,000 jobs at risk in the UAE alone, Al Bakri said.

“Extensive cost-cutting measures are being implemented by carriers to mitigate the financial impact of COVID-19,” he said. “However, due to the flight bans as well as international and regional travel restrictions, revenues are plummeting, outstripping the scope of even the most drastic cost-containment measures.”

In the Middle East, the sector contributes a total of $130 billion to the economy. This is about 4.4 per cent of the region’s gross domestic product. The aviation industry also supports 2.4 million jobs in the Middle East.

Saudi Arabia will see nearly 16 million fewer passengers as a result of travel restrictions, and its airlines will lose $3.1 billion in base revenues. Egypt, meanwhile, will lose 6.3 million passengers, and $1 billion in base revenues.

Kuwait is expected to see 2.9 million fewer passengers and lose $547 million for its airlines. As the situation prolongs, the risk of further job losses becomes even higher, IATA warned.

Lurching into a new crisis

He said airlines in the Middle East have enough cash reserves to last them for just another two months, and therefore, are facing a “liquidity crisis”.

IATA earlier this week said the situation is much the same with global airlines, many of which face the risk of running out of cash.

To support the industry and its employees, Iata is proposing direct financial support to airlines from their local governments, as well as other measures such as tax relief, extensions of payment terms, and loan guarantees. “This industry is resilient - It has gone through a lot of similar situations before, though not as bad,” said Al Bakri.

“With decisive action by governments, we can get through this crisis and keep the world connected.”

Etihad checks in with credit feature
Etihad Airways is introducing Etihad Credit allowing passengers to delay their travel plans by permitting free cancellations. The Abu Dhabi carrier is offering the original value of their booking to be used as credit towards their next trip.
According to Robin Kamark, Chief Commercial Officer at Etihad Aviation Group, “In these unprecedented times, we understand that some of our guests are either unable to, or choose not to travel and it is our responsibility to help them as much as possible.
Etihad Credit is available for all who booked before June 30. Guests have until September 30 to rebook their trip for travel until December 31. Any fare difference from the original ticket price will be charged.