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Saudi airlines seen suffering sharpest losses in Middle East on travel restrictions: IATA

Energía | Energy Transition

Global Integrated Energy Model

Saudi airlines seen suffering sharpest losses in Middle East on travel restrictions: IATA

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Saudi aviation to lose $5.61 bil in passenger revenue in 2020

It is followed by UAE on $5.36 bil

The Middle East overall loss is $19 bil

Dubai — Saudi airlines are forecast to suffer the most among their Middle East peers due to travel restrictions caused by the corona pandemic, but the biggest impact on GDP and jobs will be in the UAE, the International Air Transport Association said in a report Thursday.

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Saudi airlines' lost passenger revenue in 2020 is estimated at $5.61 billion due to a 39% drop in passenger demand that may lead to 217,570 job losses and a $13.6-billion impact on GDP, IATA said.

The UAE's airlines will lose $5.36 billion due to 40% slump in passenger demand, which may lead to 287,863 job losses and a $17.7-billion impact on GDP, it added. IATA represents 290 airlines, accounting for 82% of global air traffic.

The Middle East as a whole is forecast to lose $19 billion in passenger revenue in 2020 out of the $252 billion in total projected for the global aviation industry as countries across the world suspend flights and impose various travel restrictions.

The regional travel restrictions are hitting jet fuel demand in the Middle East, which is forecast to drop by an unprecedented 23% in 2020 from 2019, according to FGE Energy estimates.

The Middle East aviation industry supports 8.6 million jobs in the Middle East and Africa and contributes $186 billion to GDP, the IATA report said.

Saudi Arabia, the biggest Arab economy and most populous Gulf state, was among the first countries in the Middle East to suspend international flights and impose a curfew as it sought to combat the virus' spread.

Saudi Arabia, which is home to the holy cities of Mecca and Medina, will lose some 10 million religious tourists who converge on the kingdom to perform the annual Hajj pilgrimage and Umrah or mini-pilgrimage each year.

Flights resuming

The UAE is home to Emirates, the world's biggest long-haul carrier, which operates the world's largest fleet of A380 superjumbo planes and Boeing 777s.

Dubai International Airport, the home of Emirates, last year retained its title as the busiest hub for international travel, despite a 3.1% drop in passenger numbers to 86.4 million, which was attributed to global market conditions and the grounding of Boeing 737 Max aircraft.

Emirates said on Thursday it would resume a limited number of passenger flights from April 6 as the UAE relaxes travel restrictions.

On March 25, the UAE started suspending all passenger flights for two weeks, except emergency evacuation and cargo flights, marking the country's worst aviation crisis.

"Emirates has received approval from UAE authorities to start flying a limited number of passenger flights," Chairman and Chief Executive of Emirates Group Sheikh Ahmed bin Saeed Al Maktoum said on Twitter Thursday. "From April 6, these flights will initially carry travelers outbound from the UAE. Details will be announced soon."

Emirates, the biggest operator of A380 super jumbo jets and Boeing's 777, carried 29.6 million passengers over April- September, 2% fewer on the year.

'Positive sign'

IATA's Regional Vice President for Africa and the Middle East, Muhammad Al Bakri, praised in a media briefing Thursday the UAE's decision to allow Emirates to fly again.

"It's a positive sign and we hope to see more and more of this reversal of the current situation to stop the current bleeding of the airlines," al-Bakri said.

Jet fuel demand in the UAE alone accounts for over 30% of jet fuel consumption in the Middle East and more than 2.5% of global jet fuel demand, according to S&P Global Platts Analytics. This demand does not include refueling abroad of the UAE's international flights. Given the increasing connectivity of the UAE's international flights in various regions, the impact of the suspension will likely dampen global jet fuel demand by more than Middle Eastern demand, according to Platts Analytics.