IATA AGM: Trade group continues calls to reopen international aviation with COVID-19 tests

Association says deep losses will continue for world’s airlines as long as quarantines remain in effect; Crisis is 'devastating and unrelenting', says IATA's director general


Use thisThe International Air Transport Association (IATA) said at the close of its annual general meeting on Tuesday (24 November) that governments around the world should use testing and not quarantines as a way to combat the COVID-19 pandemic and re-start international aviation. The association also said the airline industry will continue to suffer deep losses into next year “even though performance is expected to improve over the period of the forecast”

The trade association said airlines can expect a net loss US$118.5 billion for 2020, which is deeper than the US$84.3 billion loss forecast in June and airlines can expect to lose US$38.7 billion in 2021, deeper than the US$15.8 billion forecast in June.

View the Industry Statistics Fact sheet
View the Economic Performance of the Airline Industry Report 
View the Outlook for Air Transport and the Airline Industry presentation

“This crisis is devastating and unrelenting,” said Alexandre de Juniac, the director general of IATA. “Airlines have cut costs by 45.8 percent, but revenues are down 60.9 percent. The result is that airlines will lose US$66 for every passenger carried this year for a total net loss of US$118.5 billion. This loss will be reduced sharply by US$80 billion in 2021. But the prospect of losing US$38.7 billion next year is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose.”

IATA said the “COVID-19 crisis challenged the industry for its very survival in 2020. In the face of a half trillion-dollar revenue drop (from US$838 billion in 2019 to US$328 billion) airlines cut costs by US$365 billion (from $795 billion in 2019 to $430 billion in 2020)”.

“The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion (US) dollars a day over 2020 and will still rack-up unprecedented losses. Were it not for the US$173 billion in financial support by governments we would have seen bankruptcies on a massive scale,” said de Juniac.

Airlines like Singapore Air have had to ground thousands of planes. (PHOTO: Steve Strike/Outback Photographics)

In 2020, all major operational parameters in the passenger business were negative:

  • Passenger numbers are expected to plummet to 1.8 billion (60.5 percent down on the 4.5 billion passengers in 2019). This is roughly the same number that the industry carried in 2003.
  • Passenger revenues are expected to fall to US$191 billion, less than a third of the US$612 billion earned in 2019. This largely driven by a 66 percent fall in passenger demand (measured in Revenue Passenger Kilometres/RPK). International markets were hit disproportionately hard with a 75 percent fall in demand. Domestic markets, largely propelled by a recovery in China and Russia, are expected to perform better and end 2020 49 percent below 2019 levels.
  • Further weakness is demonstrated by passenger yields which are expected to be down 8 percent compared to 2019 and a weak passenger load factor which is expected to be 65.5 percent, down from the 82.5 percent recorded in 2019, a level last seen in 1993.

Operational parameters for cargo are performing significantly better than for passenger but are still depressed compared to 2019:

  • Uplift is expected to be 54.2 million tonnes in 2019, down from 61.3 million tonnes in 2019.
  • Cargo revenues are bucking the trend, increasing to US$117.7 billion in 2020 from US$102.4 billion in 2019. A 45 percent fall in overall capacity, driven largely by the precipitous fall in passenger demand which took out critical belly capacity for cargo (-24 percent), pushed yields up by 30 percent in 2020.

“Cargo is performing better than the passenger business. It could not, however, make up for the fall in passenger revenue. But it has become a significantly larger part of airline revenues and cargo revenues are making it possible for airlines to sustain their skeleton international networks,” said de Juniac.

2021 Outlook

In January and February, Changi Airport in Singapore was full of passengers. Now a lone student waits to say goodbye to a friend in a nearly deserted departure hall. (PHOTO: Matt Driskill)

Airline financial performance is expected to see a significant turn for the better in 2021, even if historically deep losses prevail. The expected US$38.7 billion loss in 2021 will be second only to 2020 performance, IATA said. On the assumption that there is some opening of borders by mid-2021 (either through testing or growing availability of a vaccine), overall revenues are expected to grow to US$459 billion (US$131 billion improvement on 2020, but still 45 percent below the US$838 billion achieved in 2019). In comparison, costs are only expected to rise by US$61 billion, delivering overall improved financial performance. Airlines will still lose, however, US$13.78 for each passenger carried. By the end of 2021 stronger revenues will improve the situation, but the first half of next year still looks extremely challenging.

Passenger numbers are expected to grow to 2.8 billion in 2021. That would be a billion more travellers than in 2020, but still 1.7 billion travellers short of 2019 performance. Passenger yields are expected to be flat and the load factor is expected to improve to 72.7 percent (an improvement on the 65.5 percent expected for 2020, but still well below the 82.5 percent achieved in 2019).

The cargo side of the business is expected to continue with strong performance. Improved business confidence and the important role that air cargo should play in vaccine distribution is expected to see cargo volumes grow to 61.2 million tonnes (up from 54.2 million tonnes in 2020 and essentially matching the 61.3 million tonnes carried in 2019).  A continued capacity crunch due to the slow reintroduction of belly capacity from passenger services combined with a higher proportion of time and temperature sensitive cargo (vaccines) will see a further 5 percent increase in yields. This will contribute to strong performance in cargo revenues which are expected to grow to an historic high of US$139.8 billion.

Challenges to Recovery

Empty check-in counters at Singapore’s Changi Airport. The airport has shut down two terminals and halted construction on a new one. (PHOTO: Matt Driskill)

While the industry will see improved performance in 2021 compared to 2020, the road to recovery is expected to be long and difficult. Passenger volumes are not expected to return to 2019 levels until 2024 at the earliest, with domestic markets recovering faster than international services. Several critical challenges need urgent attention:

  • Debt Levels and Financial Support: Airlines are surviving on financial life support from governments. Even after US$173 billion of government support of various kinds in 2020, the median airline has just 8.5 months of cash to survive. Many have far less as the industry enters into the critical winter period, which is characterized by weak demand even in normal times. While cash burn has diminished from the peak of the crisis, airlines are still expected to burn an average of US$6.8 billion/month during the first half of 2021, before the industry turns cash positive in the fourth quarter of 2021.
  • Closed Borders/Quarantine: The biggest factors impeding the industry’s recovery are travel restrictions and quarantine measure that effectively prevent a meaningful revival of travel. The most immediate and critical solution is the safe re-opening of borders using systematic COVID-19 testing. Longer-term, the widespread availability of COVID-19 vaccinations should enable borders to remain open without testing or restriction, but the timeline for vaccine availability is uncertain.

“We have the ability to safely re-open travel with systematic testing. We cannot wait on the promise of a vaccine. We are preparing for efficient vaccine distribution. But testing is the immediate solution to meaningfully re-open air travel. With 46 million jobs at risk in the travel and tourism sector alone because of plummeting air travel, we must act fast with solutions that are at hand. We have fast, accurate and scalable testing that can safely do the job. The airlines are ready. The livelihoods of millions are in the hands of governments and public health authorities. Governments understood the criticality of a viable air transport sector when they invested billions to keep it afloat. Now they need to protect those investments by giving airlines the means to safely do business,” said de Juniac.

Airlines around the world have had to ground thousands of planes as the COVID-19 pandemic has virtually shut down international aviation. (PHOTO: Shutterstock)

“The numbers couldn’t get much worse. But there is a way forward. With the continued financial support of governments to keep airlines financially viable and the use of testing to enable travel without quarantine, we have a plan to overcome the worst immediately. And longer-term the progress on vaccines is encouraging. Most importantly, people have not lost their desire to travel. The market response to even small measures to lift quarantine is immediate and strong. Where barriers have been removed, travel rebounded. The thirst for the freedom to fly has not been overcome by the crisis. There is every reason for optimism when governments use testing to open borders. And we need to make that happen fast,” said de Juniac.

While all regions are impacted by the crisis, those airlines with larger domestic markets or with large cargo operations are performing better. The differences between the regions become more exaggerated in 2021 with Asia Pacific and North American carriers seeing the most significant reductions in expected losses.

Leadership changes

Alexandre de Juniac, IATA’s director general. (PHOTO: IATA file)

IATA also announced several leadership changes at its AGM.  Robin Hayes, CEO of JetBlue is now the chair of the IATA Board of Governors (BoG), succeeding Carsten Spohr, chair IATA BoG (2019-2020) and CEO of Lufthansa. Hayes will serve a term commencing immediately and ending at the conclusion of the association’s 78th Annual General Meeting to be held in 2022.  Hayes will serve an extended term as chair covering two AGMs due the disruption to governance cycles necessitated by the COVID-19 crisis. Rickard Gustafson, CEO of SAS Group will serve as Chairman of the BoG from the conclusion of the 78th IATA AGM in 2022 until the conclusion of the 79th AGM in 2023, following Hayes’ term.

Incoming IATA Director General William Walsh. (PHOTO: Stuart Bailey)

Willie Walsh, former CEO of International Airlines Group (IAG) will become IATA’s 8th director general from 1 April 2021. He will succeed de Juniac, who has led IATA since 2016 and who will step down from IATA at the end of March 2021. IATA also said JetBlue Airways will host the 77th IATA Annual General Meeting and World Air Transport Summit in Boston, Massachusetts, on 27-29 June 2021. This will be the sixth time the preeminent global gathering of aviation’s leaders has taken place in the United States and the first time it comes to Boston.

Use this one

For Editorial Inquiries Contact:
Editor Matt Driskill at matt.driskill@asianaviation.com
For Advertising Inquiries Contact:
Head of Sales Kay Rolland at kay.rolland@asianaviation.com

AAV Media Kit
Previous articleSingapore Airlines raises another S$500 million in bonds to help it survive COVID-19 pandemic
Next articlePhilippine Airlines may seek court restructuring


Please enter your comment!
Please enter your name here