The Latin American airline industry faces the worst crisis in its history because of the worldwide expansion of Covid-19; which led many countries to close their borders, becoming a great threat to many airlines.
The last drop in the global aviation sector was in 2008 with the financial crisis. However, experts agree that the current situation is much more serious and the prospects for recovery are more distant.
Everything shows that, if travel restrictions continue to be extended and a slow recovery in the world economy is generated, the demand for tickets will fall 41% annually, causing losses of at least some 15,000 million dollars in Latin America and putting at risk Millions of jobs in the air sector, according to the report of the International Association of Air Transport.
“The problem with the coronavirus is that one is not yet realizing. The big airlines that already had financial problems are the ones that will suffer the most,” Luciana de Araujo, associate professor at the Diego Portales University in Santiago, Chile, told La Voz de América.
This is the case of many Latin American airlines, which will be forced to call on governments to receive financial aid, and thus be able to survive.
“Today more than ever it is essential to seek the assistance of governments to mitigate the social and economic impact of this crisis,” said Anko Van Der Werff, president of the Colombian Avianca. Who also temporarily suspended 100% of their commercial and international flights, which implies leaving 142 planes on the ground. Likewise, they announced that 12,000 of their 20,000 employees will take unpaid leave with a duration of 1 to 6 months.
LATAM Airlines – considered the largest in the Latin industry – was forced to request state aid, receiving harsh criticism from the Chilean authorities.
In addition, the airline announced a 90% reduction in its international operations and a 40% reduction in domestic operations to face the infectious outbreak, however, the routes will continue to operate with limited frequency (from Santiago to São Paulo, Miami to Los Angeles, and from São Paulo to Miami and New York). Additionally, it is negotiating with unions to achieve a 50% reduction in the wages of its workers in Chile, Argentina, Brazil, Peru, Ecuador, Colombia and Paraguay over the next three months.
The Panamanian airline COPA suspended all its operations, and offered its employees a voluntary program of unpaid licenses, withdrawals and retirements, and asked for the suspension of contracts in Panama to face the coronavirus crisis, which will bring down over 70% your income and from which it will take some years to recover.
“These measures aim to safeguard the sustainability of the Company, protecting as many jobs as possible in the short and medium term, thus maintaining Copa’s important contribution to the Panamanian economy and the countries we serve,” said the executive president. from the Panamanian airline, Pedro Heilbron.
Many airlines have already projected their recovery in the short, medium and long term. Seeing themselves at the lowest point of their economy for the next three months, recovered by the end of 2020, and expecting to fully recover their operational demand by the end of 2021. However, they express that everything will depend on the measures that the governments and the time in which passengers’ confidence can be restored.
Until now, the government of Brazil and Colombia has taken measures to lend a hand to the airlines of their countries during this crisis, such as postponing the payment of airport concession rights or the payment of taxes. However, many other airlines are awaiting a response from their governments.