The International Air Transport Association (IATA) on Tuesday (29 September) downgraded its traffic forecast for 2020 as a result of the COVID-19 pandemic and to reflect a weaker-than-expected recovery, as evidenced by a dismal end to the summer travel season in the Northern Hemisphere. IATA now expects full-year 2020 traffic to be down 66 percent compared to 2019. The previous estimate was for a 63 percent decline.
August passenger demand continued to be hugely depressed against normal levels, with revenue passenger kilometres (RPKs) down 75.3 percent compared to August 2019. This was only slightly improved compared to the 79.5 percent annual contraction in July. Domestic markets continued to outperform international markets in terms of recovery, although most remained substantially down on a year ago. August capacity (available seat kilometres or ASKs) was down 63.8 percent compared to a year ago, and load factor plunged 27.2 points to an all-time low for August of 58.5 percent.
Based on flight data, the recovery in air passenger services was brought to a halt in mid-August by a return of government restrictions in the face of new COVID-19 outbreaks in a number of key markets. Forward bookings for air travel in the fourth quarter show that the recovery since the April low point will continue to falter. Whereas the decline in year-on-year growth of global RPKs was expected to have moderated to 55 percent by December, a much slower improvement is now expected with the month of December forecast to be down 68 percent on a year ago.
Download the IATA AIR Traffic Outlook here.
Listen to the IATA 29 September media call here.
Download the IATA Passenger Market Analysis here.
“August’s disastrous traffic performance puts a cap on the industry’s worst-ever summer season,” said Alexandre de Juniac, IATA’s director general and CEO. “International demand recovery is virtually non-existent and domestic markets in Australia and Japan actually regressed in the face of new outbreaks and travel restrictions. A few months ago, we thought that a full-year fall in demand of 63 percent compared to 2019 was as bad as it could get. With the dismal peak summer travel period behind us, we have revised our expectations downward to 66 percent.
“Traditionally, cash generated during the busy summer season in the Northern Hemisphere provides airlines with a cushion during the lean autumn and winter seasons,” de Juniac added. “This year, airlines have no such protection. Absent additional government relief measures and a reopening of borders, hundreds of thousands of airline jobs will disappear. But it is not just airlines and airline jobs at risk. Globally tens of millions of jobs depend on aviation. If borders don’t reopen the livelihoods of these people will be at grave risk. We need an internationally agreed regime of pre-departure COVID-19 testing to give governments the confidence to reopen borders, and passengers the confidence to travel by air again.”
International Passenger Markets
August international passenger demand plummeted 88.3 percent compared to August 2019, mildly improved over the 91.8 percent decline recorded in July. Capacity sagged 79.5 percent, and load factor fell 37 percentage points to 48.7 percent.
- Asia-Pacific airlines’ August traffic sank 95.9 percent compared to the year-ago period, barely budged from a 96.2 percent drop in July, and the steepest contraction among regions. Capacity fell 90.4 percent and load factor shrank 48.0 percentage points to 34.8 percent.
- European carriers’ August demand plunged 79.9 percent compared to last year, up from an 87 percent drop in July, as travel restrictions were lifted in the Schengen Area. However, more recent flight data suggests this trend has reversed amid a return to lockdown and quarantine in some markets. Capacity fell 68.7 percent and load factor dropped by 32.1 percentage points to 57.1 percent, which was the highest among regions.
- Middle Eastern airlines had a 92.3 percent fall in demand for August, compared with a 93.3 percent decline in July. Capacity collapsed 81.9 percent, and load factor sank 47.1 percentage points to 35.3 percent.
- North American carriers’ traffic tumbled 92.4 percent in August, little changed compared to 94.4 percent decline in July. Capacity fell 82.6 percent, and load factor plunged 49.9 percentage points to 38.5 percent.
- Latin American airlines had a 93.4 percent demand drop in August compared to the same month last year, versus a 94.9 percent drop in July. Capacity crumbled 90.1 percent and load factor dropped 27.8 percentage points to 56.1 percent, second highest among the regions.
- African airlines’ traffic sank 90.1 percent in August, slightly improved over a 94.6 percent decline in July. Capacity contracted 78.4 percent, and load factor fell 41.0 percentage points to 34.6 percent, which was the lowest among regions.
Domestic Passenger Markets
Domestic traffic fell 50.9 percent in August. This was a mild improvement compared to a 56.9 percent decline in July. Domestic capacity fell 34.5 percent and load factor dropped 21.5 percentage points to 64.2 percent.
US carriers’ August traffic was down 69.3 percent compared to August 2019, only a slight improvement compared to July, when traffic fell 71.5 percent. An increase in outbreaks and quarantines in key domestic markets contributed to the disappointing result.
Russian airlines saw their domestic traffic rise 3.8 percent compared to August 2019, the first market to see an annual increase since the onset of the pandemic. Falling fares along with a boom in domestic tourism were among the main contributors to the positive swing.
IATA also released cargo figures for August showing that improvement remains slow amid insufficient capacity. Demand moved slightly in a positive direction month-on-month; however, levels remain depressed compared to 2019. Improvement continues at a slower pace than some of the traditional leading indicators would suggest. This is due to the capacity constraint from the loss of available belly cargo space as passenger aircraft remain parked.
Download the IATA August 2020 cargo market analysis here.
Global demand, measured in cargo tonne-kilometres (CTKs), was 12.6 percent below previous-year levels in August (-14 percent for international operations). That is a modest improvement from the 14.4 percent year-on-year drop recorded in July. Seasonally-adjusted demand grew by 1.1 percent month-on-month in August. Global capacity, measured in available cargo tonne-kilometres (ACTKs), shrank by 29.4 percent in August (31.6 percent for international operations) compared to the previous year. This is basically unchanged from the 31.8 percent year-on-year drop in July.
Belly capacity for international air cargo was 67 percent below the levels of August 2019 owing to the withdrawal of passenger services amid the COVID-19 pandemic. This was partially offset by a 28.1 percent increase in dedicated freighter capacity. Daily widebody freighter utilisation is close to 11 hours per day, the highest levels since these figures have been tracked in 2012.
“Air cargo demand improved by 1.8 percentage points in August compared to July,” de Juniac said. “That’s still down 12.6 percent on previous year levels and well below the 5.1 percent improvement in the manufacturing PMI. Improvement is being stalled by capacity constraints as large parts of the passenger fleet, which normally carries 50 percent of all cargo, remain grounded. The peak season for air cargo will start in the coming weeks, but with severe capacity constraints shippers may look to alternatives such as ocean and rail to keep the global economy moving.”
August Regional Performance
- Asia-Pacific airlines saw demand for international air cargo fall 18.3 percent in August 2020 compared to the same period a year earlier. After a robust initial recovery in May, month-on-month growth in seasonally-adjusted demand declined for the second consecutive month. International capacity is particularly constrained in the region, down 35 percent.
- North American carriers reported that demand fell 4 percent compared to the previous year—the third consecutive month with a single-digit decline. This steady performance is due in part to strong domestic and transpacific demand on the Asia-North America route, reflecting e-commerce demand for products manufactured in Asia. International capacity decreased 28.2 percent.
- European carriers reported a decrease in demand of 19.3 percent compared to the previous year. Improvements have been slight but consistent since April’s performance of -33 percent. Demand on most key trade lanes to / from the region remained weak. The large Europe–Asia market was down 18.6 percent year-on-year in August. International capacity decreased 33.5 percent.
- Middle Eastern carriers reported a decline of 6.8 percent in year-on-year international cargo volumes in August, a significant improvement from the 15.1 percent fall in July. Regional airlines have aggressively added capacity in the last few months with international capacity improving from a 42 percent fall at the trough in April, to a decline of 24.2 percent in August, the most resilient of all regions. Demand on trade routes to and from Asia and North America remained strong with demand down 3.3 percent and up 2.3 percent respectively year-on-year.
- Latin American carriers reported demand steady at -26.1 percent compared to the previous year, ending three consecutive months of deteriorating demand. Demand on trade routes between Latin America (particularly Central America) and North America have compensated for weakness on other routes. Capacity remains significantly constrained in the region with international capacity decreasing 38.5 percent in August, the largest fall of any region.
- African airlines saw demand increase by 1 percent in August. This was the fourth consecutive month in which the region posted the strongest increase in international demand and only instance of year-on-year growth among all regions in international volumes. Investment flows along the Africa-Asia route continue to drive the regional outcomes.