Bangladesh's aviation industry caught in turbulent time
Without immediate government relief measures, there will not be an industry left standing, International Air Transport Association said on Wednesday
In January, the local private airline Regent Airways announced that it would add four more Boeing 737-800 aircraft to its fleet as part of its plan to revive business after a year of financial hardship.
But the coronavirus outbreak foiled its plan, compelling the company to make an exit from the aviation business and to ground its flight operations from March.
Although the company primarily announced a suspension of flight operations for three months, company insiders have claimed the suspension period is indefinite.
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Regent Airways was forced to pack up its business at a time when the Bangladeshi aviation industry is at its growing stage.
Only four airlines, including one national carrier, have been operating in the country.
The state-run Biman Bangladesh Airlines, which went for a mega expansion with six newly purchased Dreamliner aircraft this year, is now unable even to pay salaries to its staff due to the huge losses incurred because of the coronavirus outbreak.
Instead of expanding its business, the national carrier is now squeezing operations and cutting down employee wages and other benefits.
When a national carrier cannot pay salaries to its staff, the financial condition of the other two existing private airlines can easily be comprehended.
Novoair and US-Bangla run a domestic flight-centric business. But domestic air travel was suspended on Tuesday to contain Covid-19.
Amid this situation, all airline operators are looking to the government to initiate emergency measures to prevent a liquidity crisis from bringing down the shutters on the industry.
How other governments protected their aviation sectors from coronavirus
Australia has announced a$430 million aid package comprising refunds and forward waivers on fuel taxes, and domestic air navigation and regional aviation security charges.
Brazil is allowing airlines to postpone payments of air navigation and airport fees.
China has introduced a number of measures, including reductions in landing, parking and air navigation charges as well as subsidies for airlines that continued to mount flights to the country.
The Hong Kong Airport Authority, with government support, is providing a total relief package valued at $206 million for the airport community, including waivers on airport and air navigation fees and charges, and certain licensing fees, as well as rent reductions for aviation service providers.
New Zealand will open a $580 million loan facility to its national carrier as well as an additional NZ$600 million relief package for the aviation sector.
Norway's government is providing a conditional state loan-guarantee for its aviation industry worth $533 million.
Qatar's minister of finance has issued a statement of support for its national carrier Qatar Airways.
Singapore has undertaken relief measures valued at $82 million, including rebates on airport charges, assistance to ground handling agents, and rental rebates at Changi Airport.
Sweden and Denmark have come up with $300 million in state loan guarantees for their national carriers.
In addition to this support, the European Central Bank and the United States Congress are expected to enact significant measures to aid the airline industry in their respective jurisdictions as part of large packages of broader economic measures.
"This shows that states around the globe recognise the critical role that aviation plays in the modern world," noted the International Air Transport Association (IATA) in a press release issued on Wednesday.
But many others have still to act to preserve the important role of this sector, it said.
The IATA called for direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of Covid-19.
The association also suggested that governments or central banks give loans, loan guarantees and support for the corporate bond market – a vital source of finance. But the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies.
Moreover, the IATA called for rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other government-imposed levies.
The association now estimates that air passenger revenues could plummet $252 billion or 44 percent below the figures for 2019. This is in a scenario in which severe travel restrictions last for up to three months, followed by gradual economic recovery later this year.
The airline industry faces its gravest crisis, said the IATA.
But without immediate government relief measures, there will not be an industry left standing.
Airlines need $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit, according to the IATA statement.
