IATA’s appeal to governments to support air cargo industry affected due to coronavirus

2020 has not begun with a positive note for the globe. Yes, the world is now stuck and stranded due to the outbreak of the novel Coronavirus or COVID-19. What started as yet another flu season in the Wuhan region in China, spread out to the rest of the world in no time and is slowly claiming lives. The only good news we have is the recovery rate of the affected patients. Even then, there have been deaths. China is a global hub for exports and imports.

When China comes to a standstill, obviously the whole world will or at least that is what is happening currently as we can visibly see. The worst hit of all industries is, without a doubt, logistics and supply chain. Thanks to social distancing that kept trending across the world. But this trend is costing logistics stakeholders to a large extent and to curb the same, IATA has appealed to governments across the globe to support the air cargo industry.

Here are some of the key appeals made by IATA which require immediate action.

Leverage the power of air cargo

Timeliness is the most important factor that drives the air cargo industry ahead and Alexandre de Juniac, Director General and Chief Executive of IATA is pushing to leverage its power. In a statement, he said that nearly 185,000 flights have been cancelled since the COVID-19 outbreak from the end of January 2020. Several geographies are already running out of resources. There is an urgent need to promptly address these shortages through air cargo. Already Korean Air, Singapore’s Scoot, American Airlines and Delta Airlines as well as FedEx are offering new supply chain solutions.

Be ready with an emergency aid of US$200 bn for Middle East & African Carriers

Talking about the impact of the crisis so far, the IATA Director General has said that the impact is far worse than the crisis that emerged as a result of 9/11, SARS or even the 2008 global financial crisis. Reportedly, air cargo carriers in the Middle East and African regions are facing a 60 percent demand shortage as most of the airlines and cargo carriers on this route have been cancelled. For the same, the IATA supremo is demanding the governments to be ready with an emergency fund of US$200 billion to bounce back to normalcy when we emerge out of this crisis.

As a continuation of his request of demanding an emergency aid fund to curb the bankruptcy of carriers, the IATA chief has demanded tax relief as well as loans from central banks to support the air cargo industry. Rebates on payroll taxes, temporary waiver of ticket taxes, and extension of payment terms for the rest of 2020 are some of the appeals the IATA chief has made to the governments specifically in the Middle East as well as the African regions.

Importance of protecting the Middle East & African Airline/Air Cargo Industry

The air cargo industry in the Middle East and Africa is quite crucial as it generates jobs for millions. Its strategic location makes it the hub of cargo trade for the whole world. It is quite essential that regulatory bodies and governments come hand-in-hand to support the industry in this region.

Impact of demand reduction on air freight rates

Due to lower demand in terms of passenger traffic, the average cost of sending freight has gone up by 3 times. Anyhow this is said to have a positive impact on the balance sheet of carriers as they can cover up the losses incurred. Anyhow, freight forwarders, importers and exporters will pay a higher price for procurement and delivery.

Several regulatory bodies across the globe are pushing for reforms post the outbreak of COVID-19 or novel coronavirus. Once we emerge from this scenario, we might have a global economic crisis looming. While we follow up on the updates of COVID-19, know the power of utilizing AI in the air cargo industry.