COVID-19 threatens to push aviation industry into bankruptcy: minister

COVID-19 threatens to push aviation industry into bankruptcy: minister

Minister of Transportation, Budi Karya Sumadi.

Jakarta (ANTARA) - Minister of Transportation Budi Karya Sumadi has said the COVID-19 pandemic is threatening to push the aviation industry, especially airlines, into bankruptcy.

“The pandemic has been a grim period for various businesses, including transportation. Even transportation and logistics are the deepest sectors that are experiencing problems,” Budi Karya said in a webinar entitled ‘Adaptation of New Habits for Transport toward Advanced Indonesia’ here on Tuesday.

Conditions in the air transportation sector have been the worst because of restrictions on passenger movement, both domestically and internationally, to prevent the spread of COVID-19, he said. The restrictions have led to a drop in turnover of 30 percent to 50 percent.

“This creates a threat of bankruptcy. I take the example of air transportation in general, during the pandemic, in the national aviation industry. The drop appeared moderate in the first quarter and it fell sharply in March (2020). While entering the second quarter, the conditions were very difficult. We hope that in the third quarter, they will get better,” the minister observed.

Airlines in a number of countries have faced the threat of bankruptcy, such as Virgin Australia and Thai Airways, which have asked their governments to bail them out, he said.

“Two European airlines, Lufthansa and Air France of France, are on the brink of going out of business. Then, Thai Airways has carried out a replacement of operations this month because of the lockdown in Thailand," he added.

Another sector hit by the pandemic is the logistics sector, which heavily relies on the transportation sector.

“With the dismissal of airlines, cargo costs will also increase and disrupt the logistics sector,” the minister pointed out.

The two sectors have also contributed to economic growth, which was corrected by minus 5.32 percent.

In addition, the tourism sector has also been affected by the COVID-19 pandemic, but currently, Bali is opening up and the number of visitors to the tourist site are starting to rise.

The Minister of Transportation said that Indonesia is not the only country that has been severely affected by the pandemic. Developed countries, including the United States, are also facing the same problems, he pointed out.

“We cannot give up, so we must move on with measured activities to encourage transportation that applies health protocols,” he said.

Many adjustments have been made to the new normal amid the ongoing pandemic, such as online tickets offers and implementation of health protocols, he remarked. 

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