IATA warns of economic fallout from Trump’s Euro travel ban

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Wall Street sank into a bear market as a shock move by President Donald Trump to halt travel from Europe rattled investors already alarmed about a global recession on the back of a coronavirus pandemic.

The International Air Transport Association (IATA) warns of “broad” economic fallout from the US travel ban on Schengen Area countries, urging governments to provide support to buffer the economic dislocation of such measures.

US President Donald Trump announced the travel ban yesterday, originally saying it included cargo with the White House later clarifying the ban applied only to passengers.

Highlighting that its members continue to support governments in their efforts to contain the spread of COVID-19, IATA is urging governments, “to prepare for the adverse economic impact that they will cause. The dimensions of the US-Europe market are enormous.”

In 2019, there was a total of around 200,000 scheduled flights between the US and the Schengen Area, equivalent to around 550 flights per day. There were around 46 million passengers (roughly equivalent to 125,000 travelers every day).

Noting that while the US measure recognises the need to continue to facilitate trans-Atlantic trade, “the economic fallout of this will be broad,” IATA warns.

“Governments must impose the measures they consider necessary to contain the virus. And they must be fully prepared to provide support to buffer the economic dislocation that this will cause,” says Alexandre de Juniac, IATA’s director general and CEO

“In normal times, air transport is a catalyst for economic growth and development. Suspending travel on such a broad scale will create negative consequences across the economy. Governments must recognise this and be ready to support,” says de Juniac.

Airlines are already struggling with the severe impact that the COVID-19 crisis has had on their business with IATA estimating last week that the crisis could wipe out some USD 113 billion of revenue. That scenario did not include such severe measures as the US and other governments (including Israel, Kuwait, and Spain) have since put in place.

The US measures will add to this financial pressure, IATA says with the total value of the US-Schengen market in 2019 being USD 20.6 billion. The markets facing the heaviest impact are US-Germany ($4 billion), US-France ($3.5 billion) and US-Italy ($2.9 billion).

“This will create enormous cash-flow pressures for airlines. We have already seen Flybe go under. And this latest blow could push others in the same direction. Airlines will need emergency measures to get through this crisis.

“Governments should be looking at all possible means to assist the industry through these extreme circumstances. Extending lines of credit, reducing infrastructure costs, lightening the tax burden are all measures that governments will need to explore. Air transport is vital, but without a lifeline from governments we will have a sectoral financial crisis piled on top of the public health emergency,’ de Juniac adds.

The World Health Organization (WHO) continues to advise against the application of travel or trade restrictions to countries experiencing outbreaks. On 29 February 2020 the WHO issued revised guidance which included the following:

“Travel measures that significantly interfere with international traffic may only be justified at the beginning of an outbreak, as they may allow countries to gain time, even if only a few days, to rapidly implement effective preparedness measures. Such restrictions must be based on a careful risk assessment, be proportionate to the public health risk, be short in duration, and be reconsidered regularly as the situation evolves.”

De Juniac says: “We urge the US and other governments that have placed travel restrictions to follow the WHO guidance. This is fast evolving. Health and safety are the top priorities for governments and the air transport sector. But the effectiveness and necessity of travel restrictions must be continuously reviewed.”

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IATA warns of economic fallout from Trump's Euro travel ban
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IATA warns of economic fallout from Trump's Euro travel ban
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The International Air Transport Association (IATA) warns of "broad" economic fallout from the US travel ban on Schengen Area countries, urging governments to provide support to buffer the economic dislocation of such measures.
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