While airlines are set to turn cash-positive this year – following a year in which they were severely cash-strapped – the near-term picture is bleak, according to Iata Director General and CEO, Alexandre de Juniac.
In a recent presentation on the outlook for the aviation sector in 2021, Iata Chief Economist, Brian Pearce, pointed out that the transition from cash burn to cash generation was in sight but that the next six months would still be difficult for airlines.
This is largely a result of stricter travel regulations imposed by governments amid the resurgence of COVID-19 cases, along with the discovery of a new strain of the virus. Data for November showed a sharp decrease in passenger demand.
De Juniac was hard-hitting in his criticism of governments’ “knee-jerk” response to the COVID-19 mutation by choosing policies that would shut down travel.
“Instead of a boost from the year-end holiday period, we got even more restrictions. Governments tightened borders. Canada, UK, Germany, Japan and others added testing to their COVID-19 measures without removing quarantine requirements.”
According to De Juniac, this approach showed that the governments were not interested in managing a balanced approach to the risks of COVID-19. “They appear to be aiming for a zero-COVID world. This is an impossible task that comes with severe consequences, the full extent of which it would be impossible to calculate.”
He highlighted a few of the consequences:
- The travel and tourism economy will not recover.
- Jobs will continue to disappear.
- The lockdown’s toll on people’s mental health will continue to grow, particularly on those who are separated from loved ones.
De Juniac reiterated his call for a more balanced public policy approach, one that is based on testing as a replacement for quarantines so that the severe side-effects of COVID-19 policies can begin to be addressed.
Pearce, meanwhile, said forward bookings for the first quarter of 2021 were weak – down 80% compared with February/March last year – but that these would pick up again once vaccinations became readily available.