Local airlines battered by the new coronavirus pandemic are hoping to access emergency loans from the government as they prepare to cancel thousands of flights after the Duterte administration ordered a month-long lockdown of Metro Manila.
Roberto Lim, vice chair of the Air Carriers Association of the Philippines Inc. (Acap), told the Inquirer in an interview on Friday (March 13) that financial support could take the form of low-interest loans from the state-run Development Bank of the Philippines.
Emergency loans will help domestic airlines fight off a “cash drain” as people seek refunds or shun flying altogether, costing Philippine Airlines, Cebu Pacific and AirAsia Philippines billions of pesos in forgone revenue in the first few months of 2020 alone.
“It’s really bad, people no longer want to fly,” Lim said.
“If you look at the sources of revenue for the airlines, a big chunk of it comes from domestic,” he added.
“The growth of the Philippine aviation industry has been domestically,” he said.
While lauding efforts to contain the virus, Lim said an option for emergency loans will help send a strong message of support as airlines deal with growing financial losses.
On Thursday, President Rodrigo Duterte announced strict curbs on land, air and sea travel to and from Metro Manila starting March 15 until April 14 to control the spread of the new virus, which has caused the COVID-19 disease. The virus, which first appeared in China, has killed over 4,700 people around the world, including five in the Philippines.
This hits the airline industry hard since many consider Manila’s Ninoy Aquino International Airport (Naia), which is located in the area covered by the restrictions, their primary hub.
Naia handled over 47 million passengers in 2019, accounting for roughly 80 percent of all air traffic in the country. About half of that volume was domestic travellers, data from the Manila International Airport Authority showed.
Philippine Airlines, Cebu Pacific and AirAsia Philippines operate some 418 domestic flights in NAIA per day, spokespersons for the airlines said on Friday. This means almost 13,000 flights for the duration of the lockdown.
COVID-19’s impact on the airline sector was felt in early February after a travel ban on China was imposed. Overall demand also suffered as flyers deferred their plans for fear they would contract the disease.
Last Feb. 28, Philippine Airlines announced 300 job cuts after reporting years of losses, indicating the shaky financial situation of some local carriers entering 2020.
The Civil Aviation Authority of the Philippines and the Manila International Airport Authority (MIAA) agreed last week to delay the collection of fees such as landing and navigation charges to ease the financial pressure on the airlines. Lim earlier said those fees amounted to about P6 billion per year.