Revenue and passenger losses in Middle East and African airlines continue in free fall

Airlines around the world, most directly those in the Middle East and Africa, continue to suffer the devastating consequences of government-ordered flight cancellations, coupled with the brutal plunge in demand.

The drop in revenue in both geographical areas is of the order of $23 billion, of which $19 billion is for Middle East carriers - a 39 percent drop from 2019 - and $4 billion for African carriers - a 32 percent drop, according to the latest estimates of the International Air Transport Association (IATA).

For the Association, the best way to mitigate the ruinous effects of the crisis on the airline industry is for governments to urgently put in place different aid mechanisms “to maintain the viability of airlines” so that they are able to “lead the recovery when the pandemic is contained”.

This has already been understood by the aviation authorities of Saudi Arabia, Jordan, Morocco, South Africa, the United Arab Emirates and some other states, which have put in place financial and administrative measures to support the sector as it moves through the revenue desert created by the coronavirus.

Having viable and healthy airlines will be “essential to boost the global economy in the aftermath of the pandemic,” said Muhammad Al Bakri, IATA's regional vice president for Africa and the Middle East. However, "if governments do not act now, the crisis will be longer and more painful. 

With 290 companies from around the world in its midst, IATA's Director General Alexandre de Juniac is adamant that “there are no words to adequately describe the devastating impact of COVID-19 on the airline industry”, the economic consequences of which are dragging down “25 million people working in jobs that depend on air carriers”.

The air transport industry has proven its value in the economic and social development of Africa and the Middle East, making it an economic engine for both regions of the world. Evidence of this is that of the 25 million people mentioned above, both geographical areas provide direct or indirect employment for some 8.6 million people.

In a report dated 2 April, IATA has worsened its estimates for 2020 from three weeks ago. It sees that the increased number of cancellations in the Middle East continues to directly affect Saudi Arabia, which will lose a total of 26.7 million passengers, its airlines - Saudia, SaudiGulf, Flyadeal, Flynas, Nessma Airlines - will lose $5.61 billion and 217,570 jobs will be put in jeopardy.

The impact on the United Arab Emirates (UAE) has been particularly severe for the airline Emirates of Dubai, which has cut the salaries of all its staff, from its top manager to its most recent employee. Fortunately, the Crown Prince of the Emirate of Dubai, Hamdan bin Mohammed bin Rashid al-Maktoum, has confirmed that his government “will inject funds into the Emirates”. 

It also hurts Air Arabia, Flydubai and Etihad Airways of Abu Dhabi, which from April 7 to 20 has reopened some passenger flights to Amsterdam, Melbourne, Seoul, Singapore, Manila and Jakarta. However, the country will lose about 23.8 million passengers, $5.36 billion in revenue and 287,863 jobs are at risk, IATA said.

The third most affected country is Qatar, where about 3.6 million passengers will be dissipated and 1,320 million dollars will be lost, which will affect about 53,640 jobs, especially in its three international airports and the flag carrier Qatar Airways.

The airline has resumed air cargo flights with the Chinese cities of Beijing, Shanghai, Guangzhou, Chengdu, Chongqing and Hangzhou to move goods and medical products to the Middle East, Europe and America through connections via the airport in Doha.

The Sultanate of Oman will have a shrinkage of 3.3 million travellers, revenues will fall by $570 million, especially in its flagship company, Oman Air, and around 40,000 employees will be on the verge of redundancy. The crisis will have a minor impact on the Kingdom of Bahrain, which will lose 2.1 million passengers and will no longer collect 410 million dollars, all of which will have a negative impact on 9,600 workers and the state airline Gulf Air. 

Lebanon and Jordan are also suffering the consequences. The government of Beirut will see 3.5 million passengers disappear, an economic hole of 730 million dollars will be generated, affecting in particular its company MEA and putting 97,000 jobs at risk. In the Hashemite kingdom, the drop in passengers will be 2.8 million, mainly carried by Royal Jordanian, the drop in revenue will be 500 million and the personnel affected will be around 26,000 workers.

Among the African countries of the southern Mediterranean basin, Egypt is the most affected. IATA analysts estimate a drop in passengers of 9.5 million and the loss of 1.6 billion dollars among its many carriers - EgyptAir, Air Cairo, Nile Air, FlyEgypt, AlMasria Universal Airlines, AMC Airlines and Air Arabia Egypt - which will have a negative impact on 205,000 jobs.

In Morocco, the cut will be of 8.1 million passengers, with a fall of $1.3 billion that will impact negatively on 372,000 direct and indirect jobs in more than 20 airports and half a dozen airlines in the country, including the flag carrier Royal Air Maroc.

In the other African countries with the highest volume of air traffic and passengers, the losses are also spectacular. In South Africa, there will be 10.7 million passengers, entailing losses of $2.29 billion largely for South African Airways, putting nearly 187,000 occupations at risk.

In Nigeria, the drop is impacting 3.5 million travellers, with 760 million less revenue and an impact of 91,000 jobs on the many but small airlines flying in the country.

In East Africa, Kenya and neighbouring Ethiopia will see 2.5 million and 1.6 million passengers decline, respectively. Their revenue declines range from $540 million (Kenya) to $300 million (Ethiopia), directly affecting Kenya Airways and Ehiopian Airlines. Between 138,000 and 327,000 jobs are at risk, many of the latter at the major international airport of Bole, 65 kilometres from Addis Ababa, a hub of air traffic between Asia and the rest of the world. 

IATA's estimate of the industry's overall revenue losses through 2020 is $252 billion, a 44 percent decline from the previous year. As a result of measures taken to combat COVID-19, more than two million flights have been cancelled as of June 30.