IATA Director General Willie Walsh sees a risk that the rebound of demand for air travel could be significantly faster than the increase in capacity.
Walsh urged governments during a July 7 media briefing to let airlines know well in advance about when changes in COVID-19-related travel restrictions are likely to happen and when borders will reopen.
Walsh referred to the U.S., where some carriers have been surprised by the speed of demand recovery and could not retrain employees fast enough. While that case may have been unusual because the U.S. domestic market is so big, IATA expects the reopening of borders to cause sudden jumps in demand for which airlines need to prepare.
Reopening of North Atlantic flying could be the next big thing. “I’m optimistic that we will see travel relaxation over the coming weeks,” Walsh predicted. So far some European countries like France and Germany are allowing travelers from the U.S. back in, moves that had also been encouraged by the European Commission, but the U.S. and Canada have not reciprocated the decision.
With the Northern summer season in full swing, IATA is seeing “little evidence of coordination between governments” regarding their approach to travel restrictions during the coronavirus pandemic. Walsh noted that there are “ten different approaches to digital [vaccination] certificates” in the EU. In general, he argued that “data would support a much more relaxed environment” but that government decisions were often “not based on medical or scientific evidence.”
In May, global air traffic was still down 67% over 2019 levels. Senior Economist Ezgi Gulbas noted that the slow pace of recovery is evidence of decoupling of demand from general business confidence, which has been rising steeply. Cargo demand was 9.4% above pre-crisis levels and with that trend continuing, Walsh does not see a risk of overcapacity in the segment even if and when airlines start to return more widebodies to service in the coming months.
IATA plans to publish new traffic and financial forecasts in October when it also plans to hold its annual general meeting in Boston. Walsh expects an extended summer travel season and no waning of demand in the fall and winter. He was also optimistic about the outlook for premium traffic, including business and high-end leisure travel.
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