The COVID-19 pandemic has had a devastating effect on the global aviation industry, but one region which has been particularity hard hit is Latin America.
Firstly, many airlines in the region were struggling to make a profit even before the COVID-19 crisis. 2019 was a loss-making year and the original forecast for 2020 showed a per passenger profit of $0.45 for airlines based in Latin America.
Historically, airlines in this region have been faced with a challenging operating environment, characterized by high costs, taxes and fees, infrastructure limitations, regulatory constraints and socio-economic uncertainties.
Secondly, this region was the last to be hit by the coronavirus outbreak, and hence it will also be the last one to come out of it. COVID-19 is a public health crisis and we fully understand that governments need to first and foremost protect the health of their citizens.
However, the longer aviation in Latin America remains grounded, the more precarious the situation of the region’s airlines will become. Avianca and LATAM have already filed for Chapter 11 bankruptcy protection in the US in order to restructure, while Avianca Peru and Ecuador’s TAME will cease operations altogether.
With many governments having extended the border closures, we are facing the distinct possibility that some airlines will be grounded for six months. With average cash reserves lasting for only two months, we are likely to see more airlines not survive this crisis unless government relief and support is provided.
Some governments in the region, especially Brazil and Colombia, were quick in providing financial relief, but many others have not yet enabled any meaningful support.
We are aware that the financial situation in many countries is not the best but, as a sector, aviation fulfils an essential role in the socio-economic development of the region. Unlike other continents we do not have any viable alternative modes of transport than can provide the essential connectivity for both people and goods. And all economies in the region are reliant on tourism and foreign trade.
Agriculture and fisheries need air cargo to export their perishable goods to consumers in other parts of the world. Without aviation, tourists will not be able to explore the islands of the Caribbean nor visit historical sites like Machu Pichu.
The industry will recover from this crisis, but it will be much slower one than in the past. We expect markets to come back in phases, first domestic, followed by regional and lastly international long-haul.
In the absence of a cure or vaccine for COVID-19, ensuring that aviation does not become a meaningful vector for the spread of the virus is our number one priority, coupled with restoring public confidence.
In order to facilitate this, we have been working with other associations, stakeholders and governments across the entire travel value chain to devise standardized measures, which should enable aviation to restart in a coordinated and mutually acceptable way.
The measures that need to be implemented must be multi-layered, consistent, backed by science and, when redundant, be removed. We need to learn from the past and ensure that we do not end up with a patchwork of uncoordinated measures just like after 9/11, which still has an adverse effect on the passenger experience today.
Yes, COVID-19 has thrown aviation into survival mode overnight. But, as with any crisis, it should create an opportunity to reflect on the past and see what we can improve for the future.
Hopefully the governments in the region have now realized the importance of this sector for their individual economies and hence for the wellbeing of their people. A case in point, the continuing cargo flights which have been a lifeline in bringing in essential supplies to fight the pandemic.
It is our hope that as we rebuild this industry, the current spirit of cooperation with the respective governments will allow for the removal of roadblocks that have in the past stifled the successful development of this sector and often hindered the provision of a good passenger experience.
After all, before COVID-19 hit Latin America and the Caribbean, the aviation industry supported a total of 7.2 million jobs, handled 4.1 million tonnes of air cargo per year, provided connectivity to 385 cities across the region and links to a further 160 cities in other parts of the world, contributing $167 billion to the region's GDP.
We are doing our very best to ensure that we can continue to be an important socio-economic enabler for people from the Rio Grande to Tierra del Fuego.
Photo credit: Ocean Driven Media