Iata’s global outlook is gloomier than previously predicted. It now says that global passenger traffic will not return to pre-COVID-19 levels until 2024, a year later than previously projected.
It expects recovery in short-haul travel faster than long-haul, with short-haul recovery to pre- COVID-19 levels in 2023 (previously projected to be in 2022).
For 2020, global passenger numbers are expected to decline by 55% compared with 2019. This was previously forecast at 46% in April.
Following the 91% YOY contraction in RPKs (revenue passenger kms) in May, the YOY shrinkage in June 2020 was 86.5%. This was driven by rising demand in domestic markets, particularly China. The June load factor set an all-time low for the month at 5.6%.
The more pessimistic recovery outlook is based on a number of recent trends:
* Slow virus containment in the US and developing economies: New outbreaks have occurred in the developed world economies and in China. There is little sign of virus containment in many important emerging economies, which in combination with the US, represent around 40% of global air travel markets. Their continued closure, particularly to international travel, is a significant drag on recovery.
* Reduced corporate travel: Corporate travel budgets are expected to be very constrained by financial pressures, even as the economy improves. In addition, while historically GDP growth and air travel have been highly correlated, surveys suggest this link has weakened, particularly with regard to business travel, as video conferencing appears to have made significant inroads as a substitute for in-person meetings.
* Weak consumer confidence: While pent-up demand exists for VFR and leisure travel, consumer confidence is weak in the face of concerns over job security, rising unemployment and fear of catching COVID-19. Some 55% of respondents to Iata’s June passenger survey don’t plan to travel in 2020.
Scientific advances in fighting COVID-19, including development of a successful vaccine, could allow a faster recovery. However, at present there appears to be more downside risk than upside to the baseline forecast.
Alexandre de Juniac, Iata DG and CEO, said this bad news pointed to the need for governments to continue with relief measures – financial and otherwise. “A full northern winter season waiver on the 80-20 use-it-or-lose-it slot rule, for example, would provide critical relief to airlines in planning schedules amid unpredictable demand patterns. Airlines are planning their schedules. They need to keep sharply focused on meeting demand and not meeting slot rules that were never meant to accommodate the sharp fluctuations of a crisis. The earlier we know the slot rules the better, but we are still waiting for governments in key markets to confirm a waiver,” he said.
African airlines’ traffic sank 98.1% in June. Load factors dived 62.1 percentage points to just 8.9% of seats filled in seats originating in Africa in June, the lowest among regions.