An IATA analysis revealed that the airline industry’s global debt could rise by almost $120 billion to $550 billion by year-end.

• $67 billion of the new debt is composed of government loans ($50 billion), deferred taxes ($5 billion), and loan guarantees ($12 billion).
• $52 billion is from commercial sources including commercial loans ($23 billion), capital market debt ($18 billion), debt from new operating leases ($5 billion), and accessing existing credit facilities ($6 billion). 

“Government aid is helping to keep the industry afloat. The next challenge will be preventing airlines from sinking under the burden of debt that the aid is creating,” said Alexandre de Juniac, IATA’s Director General and CEO.

In total governments have committed to $123 billion in financial aid to airlines. Of this, $67 billion will need to be repaid. The balance largely consists of wage subsidies ($34.8 billion), equity financing ($11.5 billion), and tax relief / subsidies ($9.7 billion).

“Over half the relief provided by governments creates new liabilities,” said de Juniac. “Less than 10% will add to airline equity. It changes the financial picture of the industry completely. Paying off the debt owed governments and private lenders will mean that the crisis will last a lot longer than the time it takes for passenger demand to recover.”

Moreover, the amount of relief received by airlines differs markedly from region to region. The US CARES Act is the main component of financial aid to North American carriers and represents a quarter of 2019 annual revenues for the region’s airlines. European assistance is at 15% of 2019 annual revenues and Asia-Pacific at 10%. But in Africa, the Middle East, and Latin America average aid is around 1% of 2019 revenues.

IATA is urging governments still contemplating financial relief to focus on measures that help airlines raise equity financing. “For those governments that have not yet acted, the message is that helping airlines raise equity levels with a focus on grants and subsidies will place them in a stronger position for the recovery,” said de Juniac.

“A tough future is ahead of us,” he continued. “Containing COVID-19 and surviving the financial shock is just the first hurdle. Post-pandemic control measures will make operations more costly. Fixed costs will have to be spread over fewer travelers. And investments will be needed to meet our environmental targets. On top of all that, airlines will need to repay massively increased debts arising from the financial relief. After surviving the crisis, recovering to financial health will be the next challenge for many airlines.”

Source: https://www.airlines.iata.org/news/airline-debt-threatens-recovery

 

Owners of The Fairmont Norfolk, an iconic hotel in Nairobi, announced Wednesday that it is closing its doors indefinitely and will fire all employees over the impact of coronavirus pandemic on the business.

In a memo to staff dated May 27, the country manager Mehdi Morad said owing to the uncertainty of the direction the global pandemic will take, they have been forced to terminate employee contracts and close their properties.

The Fairmont Hotels and Resorts said they are going to close Fairmont The Norfolk and Fairmont Mara Safari Cub as a result of “spiral effect of the COVID-19 pandemic and the recent flooding of Fairmont Mara Safari Club”.

“Due to the uncertainty of when and how the impact of the global Pandemic will result in the business picking up in the near future, we are left with no option but to close down the business indefinitely,” Mr Morad said in the memo.

“It is therefore the decision of the management to terminate the Services of all its employees due to “frustration” by way of mutual separation and taking into account the loyalty and dedication the employees have put into the success of our company in the previous years.”

Employees will receive their termination letters by June 5.

Fairmont joins a growing list of hotels that have closed or suspended operation due to effects of coronavirus.

Most five-star hotels rely on tourism, events and conferences which have since dried up.

In March, Nairobi’s Tribe Hotel, Ole Sereni and DusitD2 stopped operations days after the government-imposed travel restrictions and social distancing rules to curb the spread of the coronavirus.

Other high-end hotels followed suit to cut costs as the pandemic drags on.

Restrictions on foreigners coming into Kenya have delivered a big hit to the country’s tourism industry, which brought in Sh163.56 billion last year.

Most hotels have reported occupancy rates of well below 10 percent against 75 percent normally.

Source: https://beta.nation.co.ke/dailynation/business/norfolk-closes-indefinitely-fires-all-employees-308322

Europe is starting to lift coronavirus travel restrictions, but these are not enough for Air Canada to resume international flights.

Iceland will open its borders from June 15 and Greece from July 1, but it was Italy’s lifting from June 3 that prompted a question to Air Canada CFO Michael Rousseau about launching flights.

“We need to make sure that both countries – Canada and Italy – are open for international travel to make a strong business case for travel,” Rousseau told the Wolfe Global Transportation Conference.

Europe may be opening, but Canada is not. Canadian citizens and residents returning home still have to follow a 14-day quarantine upon their return to Canada.

“We want to make sure that Canadians can go there and when they come back, they don’t have to self-quarantine,” Rousseau said.

Foreign visitors are not allowed in. That precludes Air Canada from carrying two-way traffic and instead makes it dependent only on outbound Canada travel. If Canada does allow visitors, demand is expected to be low if they have to quarantine upon arrival.

“We certainly want to ensure that any family or friends coming from Italy don’t have to self-quarantine when they come to Canada,” Rousseau explained.

Canada’s international, non-U.S., travel restrictions are scheduled through June 30 but chief public health officer Dr. Theresa Tam tapered expectations the quarantine requirement would end.

“The mandatory 14-day quarantining of people who come in remains a cornerstone as we go forwards,” Dr. Tam said.

Rousseau said restrictions at home and abroad would shape Air Canada’s return to any international country. “Those rules have to be identified and understood before we have bilateral traffic,” he said.

Air Canada expects international flying to resume on its mainline brand and not Rouge, which will see a substantial reduction of its fleet. Exiting are all of Rouge’s 767s, the only aircraft it had to fly to Europe.

Rousseau expects Rouge could resume later in the year so it could offer winter flights to the Caribbean and other sun destinations.

Rousseau hopes to preserve traffic by instead routing it through Air Canada and a partner airline’s hub.

Air Canada will conservatively add flights and evaluate growth rather than offer too many flights right away. “We can always fill in with capacity as we see the demand build,” Rousseau said.

Source: https://www.forbes.com/sites/willhorton1/2020/05/21/europe-lifts-travel-restrictions-but-air-canada-waits-to-resume-international-flights-during-covid-19/amp/

 

The Kenya Association of Travel Agents held the first industry meeting this year on May 20, 2020. The meeting was held online due to the social distancing conditions occasioned by the Coronavirus pandemic that has wreaked havoc on the industry since March 2020 when the first case was announced in Kenya.

KATA Chairman Mr. Mohammed Wanyoike welcomed the members to the meeting. He pointed out how the pandemic has devastated the travel and tourism industries both locally and globally. Members were informed that the board has had several engagements with the Tourism and Wildlife Cabinet Secretary Najib Balala through various forums to discuss the effects and mitigation measures of the pandemic in the industry.

Members were also asked to use the labour advisory as advised by KATA on making decisions on staffing based on their individual situations. Mr Wanyoike pointed out that the largest resource in the industry is labour and this has been affected as businesses are not conducting any business leading to releasing staff on unpaid leave or offering pay cuts until the end of the pandemic.

Ms Mucuha during a presentation pointed out that the effects of COVID-19 have been felt locally and globally with recently released information from International Civil Aviation Organisation (ICAO) revealing that airline sales available for sale in Africa have gone down to 38 percent down from 71 percent reduction due to low business.

Travel agents extensively discussed ways of business recovery coming up with strategies that will see to business continuity for travel agents post COVID-19.

Emirates has announced its plan to operate scheduled flight services from 21 May to nine destinations: London Heathrow Frankfurt, Paris, Milan, Madrid, Chicago, Toronto, Sydney and Melbourne. The airline will also offer connections in Dubai for customers travelling between the UK and Australia.

Travellers will only be accepted on these flights if they comply with the eligibility and entry criteria requirements of their destination countries. This includes an approval from the Federal Authority for Identity and Citizenship (ICA) for UAE residents who wish to return to Dubai.

Adel Al Redha, Emirates’ Chief Operating Officer said: “We are pleased to resume scheduled passenger services to these destinations, providing more options for customers to travel from the UAE to these cities, and also between the UK and Australia. We are working closely with the authorities to plan the resumption of operations to additional destinations. We have implemented additional measures at the airport in coordination with the relevant authorities in respect to social distancing and sanitization. The safety and wellbeing of our employees, customers and communities, remain our top priority.”

In addition to the scheduled services, Emirates will also continue to work closely with embassies and consulates to facilitate repatriation flights for visitors and residents wishing to return home. This week, the airline plans to operate flights from Dubai to Tokyo Narita (15 May), Conakry (16 May), and Dakar (16 May).

Passengers and airlines would face radical changes to the process of air travel under IATA’s guidelines for restarting the industry when the Covid-19 pandemic subsides.

While its recommendations are not binding, the association hopes that governments, airlines and airports will adopt the measures as a middle ground to allow passengers to fly safely while enabling the industry and wider economy to open up.

Describing the challenge of resuming operations as the “greatest challenge in civil aviation history”, IATA is proposing a “layered approach” to biosecurity, which will impact the customer experience even before passengers arrive at the airport.

“There is no single measure that will reduce risk and enable a safe restart of flying,” says IATA director general Alexandre de Juniac. “But a layering measure that are globally implemented and mutually recognized by governments can achieve the needed outcome.”

IATA is recommending that governments set up online portals to collect pre-flight information that can be used to asses passengers’ health status and allow contact-tracing should they become unwell.

Once at the airport, travellers face temperature-screening and physical distancing, and will be required to wear masks for the duration of their journeys.

Aircraft boarding will have to be modified to allow greater social distancing, and there will be an increase in self-scanning of documents to minimise human-to-human interaction. Carry-on luggage should also be minimised in order to smooth out the boarding process.

Once on board, passengers will be banned from changing seats and may be handed wipes to sanitise their seat environment.

However, given that passengers and crew will be required to wear masks and that aircraft are fitted with medical-grade air filters, IATA does not believe that physical distancing will be required. “Physical distancing on board, through for example blocking seats, is not necessary,” argues Nick Careen, IATA’s senior vice-president for airport, passenger cargo and security.

Under IATA’s recommendations, deplaning would take longer and increase in complexity to minimise contact between passengers.

Passengers may again face temperature-screening at their destinations, while a faster baggage-claim process will minimise contact and allow social distancing. But IATA hopes that disruption here can be minimised by mutual recognition of the origin airport’s screening measures.

Given the additional suite of biosecurity measures, passengers may find that the entire airport process is extended. “We are modelling it,” says Careen.

IATA believes this system strikes the “right compromise” between the needs to prevent the spread of coronavirus and to open up the economy, while avoiding adding too many constraints to travellers.

Yet it is also clear that such a system will add significant cost and complexity to the system, and render it daunting for many passengers.

“This can be done in the most inobtrusive way possible if we educate our passengers,” Careen contends, adding that rollout of the programme will be accompanied with a communications strategy.

The additional cost of the process should be shared between airlines, governments and airports, in IATA’s view. “We do not expect too many difficulties on that point,” says de Juniac, on the grounds that “what [we] are proposing is pretty reasonable”.

IATA highlights that the process was designed with cost in mind, and that the equipment required is either relatively low-tech, such as masks and disinfectant wipes, or already available.

The association also stresses that measures should be temporary, regularly reviewed and “replaced when more efficient options are identified or removed should they become unnecessary”. Longer-term, it hopes that coronavirus testing in airports and immunity passports can be used to smooth the travel process for travellers.

“The roadmap is the industry’s high-level thinking on safely restarting aviation. Timing is critical,” says de Juniac. “Governments understand the importance of aviation to the social and economic recovery of their countries and many are planning a phased reopening of borders in the coming months.

“We have a short time to reach agreement on the initial standards to support safely reconnecting the world and to firmly establish that global standards are essential to success.”

Source: https://www.flightglobal.com/strategy/iata-sets-out-biosecurity-roadmap-to-restarting-flights/138445.article

 

The United Arab Emirates (UAE) has slightly eased its emergency COVID-19 border closures by lifting a restriction on foreign residence visa holders entering the small Persian Gulf country. From June 1, the Ministry of Foreign Affairs and International Cooperation says expat residents will be able to return to the UAE to be reunited with their families after they were effectively locked out of the country.

In its response to stem the spread of the novel Coronavirus, the UAE initially stopped issuing new visitor visas and then suspended its visa on arrival for nationals from 70 different countries on March 18. Officials then went one step further on March 25 by banning the arrival of all passengers into the country except for Emirati citizens.

The authorities have not indicated when travel restrictions might be eased further but there are said to be high-level discussions with some governments about the prospect of introducing mutually agreed “travel bubbles”.

Source: https://www.paddleyourownkanoo.com/2020/05/19/the-uae-slightly-eases-travel-restrictions-foreign-residence-visa-holders-now-free-to-return/

 

Kenya Airways Chief Executive Officer Allan Kilavuka said the price of air tickets will most likely be hiked if the government allows the national carrier to resume flights.

Kilavuka was speaking during a strategy meeting organized by the Ministry of Tourism to discuss how the industry can recover from the effects of Covid-19.

He indicated that air travel would completely change as every country comes up with new plans and policies to be adapted post coronavirus.

55 to 65 percent of people, he noted, travelled for leisure, which means between May and December airlines are missing out on this big business and income.

“Travel is not going to be cheap. 55-65% of people travel for leisure. Therefore we are going to lose 51-76% of our market between now and December as business travellers are the ones that are going to travel first,” Kilavuka said.

In addition, the social distancing between seats in the plane will be the new norm which will result in a spike in the cost of air tickets to cover for uncoccupied seats.

The KQ boss noted that among other norms will be mandatory wearing of face masks by air passengers and crew and airport staff to wear protective gear.

Tourism PS Sophia Kwekwe, who was also at the meeting, added that domestic tourism is what the government is banking on to boot the hospitality industry.

“Domestic Tourism is going to be the way forward. Road and train travel is going to pick first. We are therefore working on opening up the regions that have not been as popular as parks and the Coast. We also looking into pursuing bilateral tourism,” Kwekwe said.

Source: https://nairobinews.nation.co.ke/featured/covid-19-victims-deserve-decent-burials-experts-now-say

 

The long wait for pending bills could finally end after Cabinet Secretary Najib Balala assured travel agents that he was keenly following up on the refund of pending bills amounting to over Kes. 400 million.

Speaking at a webinar organised by the Kenya Tourism Federation on May 12, 2020, Mr. Balala assured travel agents that he is following up on the matter and hopes that the pending bills will be reimbursed in June.

Travel agents have fervently pursued the refund of the Kes 434 million owed by government as it is the crucial injection needed to boost businesses already failing due to the COVID-19 pandemic.

“We have been working closely with government ministries to ensure that these funds are remitted to agents in good time to allow the sustainability of our businesses during this COVID-19 period where the travel industry has ground to a stop. Currently travel agents are not operating as no travel is taking place. The only business we are handling right now is refunding our clients and this has led to closure of many agencies who are operating on negative right now” KATA Chairman Mr. Mohammed Wanyoike said in a previous interview.

He stated that he is hopeful that by the end of the first half of the year, travel agents will have received their refunds and will be able to work towards restoring their businesses post pandemic.

Other matters discussed during the webinar included the travellers changed habits post COVID-19. Mr. Balala noted that travellers would only be comfortable once a vaccine to contain the virus is found. He urged the industry to focus on attracting travellers especially the youth by putting special emphasis on their health, safety, price and providing a worthwhile experience.

Even as travel opens up eventually, he said, proper precaution and restrictions that has been put in place by the government have to be enforced in order to avoid the spread of the highly contagious disease.

Kenya Tourism Board CEO Ms. Betty Radier who was a panellist during the forum urged industry players to be COVID-19 ready in order to accommodate the needs of the traveller.

The webinar was hosted by KTF CEO Ms Susan Ongalo, moderated by KTF Chairman Mr. Mohammed Hersi. Mr Alex Avedi. The CEO Safarilink Aviation was a panellist at the forum.

The Kenya Association of Travel Agents (KATA) has decried the slow rate at which government and airlines are taking to remit pending bills and refunds owed to travel agents.

KATA Board Chairman Mr. Mohammed Wanyoike said that travel agents need these funds to cater for refunds to their clients.

“With the restricted movements in and out of the country occasioned by the highly contagious COVID-19, travellers have cancelled their scheduled flights. This means that no business is taking place and no revenue is coming in. Travel agents need these funds to refund travellers who have cancelled their flights,” he said.

Airlines, he further pointed out, have instructed passengers who had booked flights with travel agents to seek refunds from their travel advisors. “This puts agents in a bad position as the airlines have declined to refund tickets bought through agents,” Mr Wanyoike stated.

He noted that some airlines are issuing vouchers instead of cash refunds through agents therefore causing conflict for the agents, as customers are demanding full refunds in “cash” claiming that they have no immediate travel plans in the foreseeable future. Similarly, the travel agents cannot assign this voucher on other bookings owing to the issuing restrictions. This has also led to a bad stalemate between the customers and travel agents owing to the inflexibility demonstrated by the airlines issuing the refund vouchers.

On the other hand, Mr. Wanyoike further said, the government owes travel agents over Kes. 434 million in pending bills. “We have been working closely with government ministries to ensure that these funds are remitted to agents in good time to allow the sustainability of our businesses during this COVID-19 period where the travel industry has ground to a stop.

Currently, he added, travel agents are not operating as no travel is taking place. “the only business we are handling right now is refunding our clients and this has led to closure of many agencies who are operating on negative right now”.

He reiterated, “With COVID-19 disrupting life and business as we know it, we are bracing ourselves for a very difficult year. From a robust year where Kenya received over 2 million international guests, an increase of 37.7 percent as compared to 2018, this year we are down to zero. This has put millions of jobs at risk”.

Mr Wanyoike called upon clients and travellers owed to be calm and patient as travel agents strive to resolve the impasse. “KATA is founded on integrity, professionalism and transparency. We are pursuing the refunds and other monies owed persistently to ensure that each traveller receives their refunds,” he stated.