Abu Dhabi, UAETuesday 1 December 2020

Global airlines more pessimistic about air travel growth for 2020

Airline industry body cuts 2020 traffic growth forecast to a decline of 66% year-on-year, compared to a previous estimate of 63%

Job losses in aviation and related industries could climb to 1.7 million in the Middle East in 2020, according to the International Air Transport Association. Reuters. 
Job losses in aviation and related industries could climb to 1.7 million in the Middle East in 2020, according to the International Air Transport Association. Reuters. 

Global airlines are more pessimistic about air travel growth in 2020 after a second wave of Covid-19 cases and travel restrictions stalled a modest improvement during the summer, the International Air Transport Association (Iata) said.

The industry body cut its forecast for this year's traffic growth to an average decline of 66 per cent year-on-year, from a previous estimate of 63 per cent.

"The outlook has actually gotten darker, something I would not have believed possible just a few months ago," Alexandre de Juniac, Iata's director general, told reporters at an online media conference on Tuesday. "This year the industry is heading into the slow season in the worst financial position in its history."

Iata reiterated its plea for governments to lift travel restrictions that it blames for stalling its recovery, adopt rapid Covid-19 testing of passengers prior to international departures at airports and continue extending support that will allow airlines to survive the Covid-19 pandemic.

"This is no time for governments to walk away ... new job-saving measures are needed, including financial measures that do not add to over-stressed balance sheets," Mr de Juniac said. "We need to re-open borders and remove travel-killing quarantines."

In August, passenger demand fell 75 per cent from the same month last year, compared to a 79.5 per cent drop in July.

The short-lived recovery was driven by domestic markets that dropped 50 per cent, while international travel fell 88 per cent. Russia's domestic market posted a 3 per cent rebound from last year, in contrast with Australia - down 91 per cent. China's internal flights are 19 per cent below last year's level.

Load factors, a measure of aircraft seats filled, plunged 27.2 points to a record low for August of 58.5 per cent.

"Both domestic and international load factors are well below what would be necessary to break even, so the industry is restarting but it looks as though it's still burning through cash, still making losses in its operations at the moment," Brian Pearce, Iata chief economist, said.

Middle Eastern airlines posted a 92.3 per cent year-on-year fall in demand for August, compared with a 93.3 per cent annual decline in July. Capacity collapsed 81.9 per cent, and load factor sank 47.1 percentage points to 35.3 per cent.

Forward bookings data points to a weak fourth quarter this year, Mr Pearce said.

An Iata passenger survey in September showed no improvement in sentiment towards air travel since June, he said.

While business confidence has improved as economies re-open, consumer confidence has remained low.

"Until we see stronger consumer confidence, we fear that a revival in leisure passenger travel will be relatively weak," Mr Pearce said.

As a result of the stalled improvement during the summer months, Iata is "less optimistic" about the remainder of the year and has downgraded its forecast for full-year passenger traffic.

"We do think these coming winter months are going to be pretty challenging for the airline industry," Mr Pearce concluded.

Global air cargo demand, measured in cargo tonne-kilometers, fell 12.6 per cent in August year-on-year, an improvement from the 14.4 per cent decline in July. The grounding of passenger aircraft has reduced cargo capacity.

Updated: September 29, 2020 08:21 PM

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