LONDON – This week, Emerging Risks, a publishing company that specializes in showcasing the latest strategic and operational risks that businesses face, has revealed that IATA is asking for the global insurance and reinsurance industries to help in the recovery of the aviation sector in the wake of the Covid pandemic.
IATA’s Director General Comments
As part of this release, IATA’s (International Air Transport Association) Director General, Willie Walsh, has said that the Covid pandemic was the “worst crisis in history”, and as such, is now asking for the global insurance and reinsurance industries to assist with the aviation sector’s recovery.
As we begin to see the aviation sector slowly regain pace in the wake of the Covid pandemic, and as we have seen a recent spike this year in the demand for air travel, IATA has said that they expect the industry losses this year to reduce to $9.7 billion, which is a significant improvement on the $180 billion loss during 2020 to 2021.
During the pandemic, many of the world’s governments implemented heavy travel restrictions in order to limit the spread of the virus, and in turn, the aviation sector took a heavy punch as normal passenger levels plummeted to their lowest levels ever recorded in modern aviation history.
This drove airlines and airports to lay off no longer-needed staff in order for their businesses to survive the passenger drought.
Not only this, but we also saw passenger carriers turn some of their commercial passenger aircraft into a temporary freighter by removing the passenger seats from the cabin, known as a preighter.
This enabled those passenger airlines to adopt a new style of business by operating much-needed cargo flights, which brought in some form of cash so that not all of their aircraft were sitting in storage, not being utilized, and in turn, costing the business more money.
However, this certainly didn’t make up for the loss but did help in a way for many carriers to survive the pandemic.
In a statement to Emerging Risks, Willie Walsh commented on his thoughts about what the aviation industry’s regulators and insurance agencies could do in order to aid the further recovery of the sector for many operators.
Walsh said, “National regulators can help the industry recover by allowing the market to perform as intended without market distortions introduced by poorly thought out regulation.”
“In particular, regulation around slots, accessibility and consumer rights, need to take into account the actual workings of the market.”
“On slots, we continue to require flexibility to adjust schedules because the world is still far from normal.”
“On consumer regulation, at least 30 countries are looking at implementing new rules, largely in response to the extraordinary circumstances created when governments unilaterally shut down connectivity and forced the cancellation of millions of flights.”
“On accessibility, we need countries to align on requirements based on the Convention on the Rights of Persons with Disabilities so that we do not face a situation where each country has its own set of rules.”
“Finally, we need regulators to take a firm hand to ensure that our infrastructure partners, particularly airports, do not attempt to repay themselves for the losses we all suffered, by raising charges.”
“Out of the top 100 busiest airports, more than half announced increases for 2022 and 2023 – expecting their customers to make up for the revenues they did not get during the pandemic.”
“Turning to our other business partners, and that would include insurers, the main message is to recognize that we have been through the worst crisis in history and to work with industry as we climb back into financial health.”
All in all, it is evident that IATA is still pursuing the remainder of the aviation industry’s partners as well as governing regulators, to come to terms with the realization of the chaos they had created and need to help encourage growth back into the sector, rather than hinder that growth, meaning operators will remain in a constant battle to return to profitability, whilst keeping their customers onboard.