Panama City, Panama - The International Air Transport Association (IATA) called for support measures from the government of Panama to address the impact of the COVID-19 crisis on the air transport sector.
The spread of COVID-19 has virtually paralyzed air traffic worldwide, presenting an unparalleled challenge to aviation, tourism and commerce - industries which are vital to the social welfare and economic development of countries. Panama relies heavily on its air connectivity with 89 international destinations, ensuring easy access to the country for tourists, business travelers and cargo, alike. IATA therefore calls on the authorities to consider measures which can provide relief and assistance, both in the immediate as well as the longer term, for this sector and its extended value chain, both of which play a major role in providing stability and economic development.
“Global aviation is facing an unprecedented crisis. Passenger traffic has stopped, and cash flows are almost non-existent. We estimate that the passenger revenues generated by the Panamanian market will fall by around US$700 million in 2020 and that on a worldwide basis airline liquidity will decrease by US$61 billion in the second quarter. In this context, although airlines have proactively taken emergency measures to reduce the economic impact on their companies, the gravity of this situation makes it essential for national governments to safeguard the airlines’ liquidity. This will enable airlines to survive this crisis, thereby protecting the direct and indirect jobs generated by air transport, as well as the flow of tourists and business travelers to the country," said Peter Cerdá, IATA's Regional Vice President for the Americas.
Air transport is one of the cornerstones of Panama's economy, supporting a value chain which includes small and medium sized enterprises, corporations and multinationals, along with a wide variety of sectors, such as hotels and tourist facilities. Thus, the air transport industry in Panama contributes US$8.5 billion to the country's GDP and supports some 238,000 direct and indirect jobs. In total, 14% of Panama's GDP is supported by the air transport sector and foreign tourists arriving by air.
According to IATA’s forecasts, as a result of the COVID-19 crisis, the sector's contribution to Panama's GDP could fall by some US$ 4.6 billion and place up to 12,000 direct jobs and 126,000 indirect jobs at risk.
"Without immediate relief measures, the airlines serving Panama today will not be able to continue their operations at pre-crisis levels, or in the worst case, could cease to exist altogether. This assistance encompasses securing essential supply chains by air, preserving as many jobs as possible and ensuring that connectivity and tourism can recover quickly," Cerdá added.
In order to best cushion the financial impact, the government could consider the following options, similar to those measures taken by countries such as Brazil, Colombia, Norway, New Zealand and the United States, among others.
Airport Fees and Charges: Suspension of aircraft parking fees at Tocumen International Airport given the temporary cessation and eventual reduction of airline operations. Also, the deferral of the payment of airport charges for a determined period of time, as well as a freeze of the fees for two years. This will reduce pressure on airlines' cash flow.
Emergency business plan: Temporary postponement of the payment of the dividend that Tocumen International Airport pays to the National Treasury. This will allow Tocumen International Airport to strengthen its finances while supporting its customers.
Deferment of capital expenditures: While being aware that investments are necessary for the growth of the airport, we request that non-essential expenditure be deferred. On the other hand, and with prior consultation with the airlines, we will study measures that will allow Tocumen to strengthen its competitive position when flights return to their pre-crisis volumes.
Credit Facilities: Formulate policies and incentives that allow the airline industry to access credit facilities, to mitigate the economic impact on the sector and, thus, provide options to help both the tourism sector and the airline sector.
"As soon as the COVID-19 virus is under control, the world economy will have to be rebuilt. Air connectivity in tourism and foreign trade will be essential for this to happen. For Panama, it is essential to maintain the country's air connectivity - the best in the region - which has not only allowed air transport to become one of the main pillars of its economy, but has also permitted Panama to offer its natural beauty - its beaches, mountains, and seas - to tourists from all over the world," said Cerdá.
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