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Traffic recovery slower than expected

August 24, 2020 Aviation No Comments Email Email

IATA estimates that global passenger traffic (revenue passenger kilometers or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.

Short haul travel will do better than long haul travel so passenger numbers will recover slightly faster than traffic measured in RPKs and should reach pre-COVID-19 levels in 2023. For 2020, however, global passenger numbers are expected to decline 55%.

June 2020 figures back up the prediction with RPKs down 86.5% on June 2019 and an all-time low load factor of 57.6%.

The delayed recovery is due to a number of factors, including renewed outbreaks of COVID-19 in a number of countries such as the United States. In total, around 40% of global air travel markets are affected. Stop-start quarantines are having much the same effect as lockdowns.

In addition, corporate travel budgets are expected to be constrained as companies continue to face financial pressures. Though historically GDP growth and air travel have been highly correlated, surveys suggest this link has weakened, particularly with regard to business travel, as video conferencing appears to have made significant inroads as a substitute for in-person meetings.

There is weak consumer confidence too due to rising unemployment, low income, and the perceived risk of catching COVID-19. Some 55% of respondents to IATA’s June passenger survey don’t plan to travel in 2020.

Scientific advances in fighting COVID-19, including the development of a successful vaccine, could allow a faster recovery. However, at present there appears to be more downside risk than upside to the baseline forecast.

Alexandre de Juniac, IATA’s Director General and CEO accepts that the upturn in traffic has so far been weak. “What improvement we have seen has been domestic flying,” he says. “International markets remain largely closed. Consumer confidence is depressed and in many parts of the world infections are still rising. All of this points to a longer recovery period and more pain for the industry and the global economy.”

As a result, IATA is calling for continued relief measures. A full Northern Winter season waiver on the 80-20 use-it-or-lose it slot rule, for example, would provide critical relief to airlines planning schedules amid unpredictable demand patterns.

“Airlines need to keep sharply focused on meeting demand and not meeting slot rules that were never meant to accommodate the sharp fluctuations of a crisis,” says de Juniac. “The earlier we know the slot rules the better, but we are still waiting for governments in key markets to confirm a waiver.”.

IATA urges governments to implement a layer of measures including the International Civil Aviation Organization’s (ICAO’s) global guidelines for restoring air connectivity contained in ICAO’s Takeoff: Guidance for Air Travel through the COVID-19 Public Health Crisis. IATA also sees potential for accurate, fast, scalable and affordable testing measures and comprehensive contact tracing to play a role in managing the risk of virus spread while re-connecting economies and re-starting travel and tourism.

“We need to learn to manage the risks of living with COVID-19 with targeted and predictable measures that will safely re-build traveler confidence and shattered economies,” said de Juniac.

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