According to the International Air Transportation Association (IATA), by year-end the debt for the aviation industry could grow to US$ 550 bn (US$ 1= RM4.36) and the amount of debt could increase dramatically by 28 percent or US$ 120 bn.

In total it said, governments decided to provide financial assistance of US$ 123 billion for airlines to survive COVID-19.

"For this, it would be necessary to pay back 67 billion dollars. The balance consists largely of wage subsidies (34.8 billion dollars), equity funding (11.5 billion dollars), and tax relief and subsidies (9.7 million dollars).

“This is vital for airlines which will burn through an estimated US$60 billion of cash in the second quarter of 2020 alone,” it said in a statement.

According to Alexandre de Juniac, IATA Director General and Chief Executive Officer, government-spread aid helps to keep the business going, but more than half of the support from the government creates new liabilities.

“Less than 10 percent will add to airline equity. It changes the financial picture of the industry completely,” he said.

De Juniac said that the payment of government and private lenders' debt would mean that the crisis will last much more than the time it takes to recover passenger demand.

“A tough future is ahead of us. Containing COVID-19 and surviving the financial shock is just the first hurdle. Post-pandemic control measures will make operations more costly. Fixed costs will have to be spread over fewer travelers. 

“And investments will be needed to meet our environmental targets.  On top of all that, airlines will need to repay massively increased debts arising from financial relief. After surviving the crisis, recovering to financial health will be the next challenge for many airlines,” he said.

IATA said, that since many airlines are still desperately needing financial lifelines, government assistance could influence the industry's recovery speed and strength.

It, therefore, urged the governments that still envisage financial relief to focus on initiatives helping airlines to raise financial support.