FRANKFURT—IATA warned Feb. 3 that recovery of air travel in 2021 could be significantly slower than previously expected.
IATA chief economist Brian Pearce said demand volume for the full year could end up rising only 13% to 38% of pre-crisis levels if new coronavirus mutations continue to spread and vaccines prove to be less effective against them than foreseen. “The near-term outlook is very much darker than we expected,” Pearce said.
IATA is not yet revising its guidance for 2021 downwards. The association still believes that air travel will return to around 50% of 2019 levels but Pearce pointed out that “risks have risen.” Pearce now says that flying half of the pre-crisis volumes is “the best that we can achieve.” And while the industry has already received close to $200 billion in various forms of government aid to stay afloat, IATA director general and CEO Alexandre de Juniac said that another $70-80 billion are needed for airlines to be able to bridge the year, and until recovery starts in earnest.
The airline group released full-year 2020 figures showing demand fell by 65.9% compared to full-year 2019 figures, the sharpest decline in history. International traffic had a steeper fall (down 75.6%) than domestic, which fell 48.8%.
The decline differed somewhat by region. The Middle East was the worst affected, down 72.2% year-over-year (YOY). The Asia-Pacific region was the least affected, falling 61.9% YOY as Asia benefited from some large domestic markets such as China, Japan and Korea. Latin America, falling 62.1% YOY, also fared slightly better than the global average.
Of the domestic markets, Russia and China recovered best to 23.5% and 30.8% below 2019 levels, respectively. The U.S. saw a drop of 59%.
International demand was “nothing short of a disaster,” Pearce said. With new travel restrictions being imposed the recovery has been completely reversed in many markets. This led to demand at the end of December 2020 being weaker (down 70%) than for the full year average. Pearce warned that forward bookings levels in January were getting lower, too.
Provided vaccines are effective and the industry’s worst concerns do not materialize, IATA still expects a much better second half of 2021 as key markets could see herd immunity against COVID-19 anywhere from April (U.S.) to September (EU). Once the situation improves, the “key question” to Pearce is how governments will react. “So far they have been risk-averse,” Pearce said. But de Juniac said that “eventually, governments will recognize that the risk of restarting our lives and travel is tolerable.” Once that is the case, “we will not waste a minute to reconnect the world.”
To Pearce there is “clear evidence of pent-up demand,” though he conceded that it is “vulnerable to shocks. Controlling the virus has become much more difficult.” Pearce also noted that he expects some business trips will be “substituted by video conferences” in the future.
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