The International Air Transport Association (IATA) has reported that more than 50% of the global passenger fleet is now grounded due to the impact of travel bans related to COVID-19.

In its Economics’ chart of the week on airline liquidity crunch – where it said the industry is expected to burn through a US$61 billion on cash reserves in Q2 – IATA also noted swift measures being implemented by airlines to cut costs including parking planes amid weak demand.

"Airlines have taken swift and drastic action to preserve as much cash as they can. More than 50% of the global passenger fleet has now been grounded which has helped airlines to reduce their variable costs (ie those directly related to operations)," IATA said. 

Depending on hedging practices, the significantly lower oil price has also contributed.

"The groundings have helped airlines reduce their variable costs in the face of the crisis and the significantly lower oil price has also contributed, depending on hedging practices," IATA said. 

However, it noted that these variable costs constitute only 51% of the average airline's total costs.