Slow COVID-19 containment, reduced corporate travel and weak consumer confidence will push the commercial aviation industry’s full recovery back by a year, according to the International Air Transport Association (IATA).
An updated forecast from the aviation industry’s peak body predicts global passenger traffic (measured in revenue passenger kilometres) will not return to pre-coronavirus levels until 2024.
The prediction from IATA comes as the recovery in short-haul travel is expected to happen faster than long haul, due to domestic markets opening ahead of international.
“Scientific advances in fighting COVID-19, including development of a successful vaccine, could allow a faster recovery,” it said.
“However, at present, there appears to be more downside risk than upside to the baseline forecast.”
The peak body said that renewed outbreaks of coronavirus in developed economies like the United States and China, and in emerging economies, would continue to be a “significant drag” on international travel’s recovery.
Additionally, as corporate travel budgets shrink from companies under financial pressure, and as video conferencing continues to substitute in-person meetings, IATA said reductions in business travel had also influenced its latest global passenger forecast.
Consumer confidence is also weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19, IATA said, despite “pent-up demand” existing for visiting friends and relatives and leisure travel.
However, some 55 per cent of respondents to IATA’s June passenger survey said they do not plan to travel in 2020.
June 2020 passenger traffic foreshadowed the slower-than-expected recovery, with revenue passenger kilometres down 86.5 per cent compared to the same period, last year – slightly improved from a 91 per cent contraction in May.
IATA said the slight increase in demand was driven by improvements in domestic markets, particularly China.
The June load factor, however, set an all-time low for the month at 57.6 per cent.
International traffic also shrank for the month by 96.8 per cent compared to June 2019, and only slightly improved over a 98.3 per cent decline in May, year-on-year.
Capacity fell 93.2 per cent and load factor contracted 44.7 percentage points to 38.9 per cent.
In the Asia Pacific (which represents the largest share of the world market at 34.6 per cent), airlines’ June traffic plummeted 97.1 per cent compared to the same period a year ago.
This was a small improvement from the 98.1 per cent decline in May. Capacity also fell 93.4 per cent and load factor shrank 45.8 percentage points, to 35.6 per cent.
Notwithstanding improvements in domestic traffic, international traffic – which in normal times accounts for close to two-thirds of global air travel – remains virtually non-existent, IATA director general and chief executive Alexandre de Juniac said.
“Most countries are still closed to international arrivals or have imposed quarantines that have the same effect as an outright lockdown,” he said.
“Summer – our industry’s busiest season – is passing by rapidly; with little chance for an upswing in international air travel unless governments move quickly and decisively to find alternatives to border closures, confidence-destroying, stop-start re-openings and demand-killing quarantine.”
Featured image source: iStock/KenRinger