IATA: Passenger demand improving but Omicron variant still impacting overall aviation recovery

Air cargo shows 'second-biggest improvement' in year-on-year demand since IATA started to monitor cargo performance in 1990

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The International Air Transport Association (IATA) announced full-year global passenger traffic results for 2021 showing that demand (revenue passenger kilometres or RPKs) fell by 58.4 percent compared to the full year of 2019. This represented an improvement compared to 2020, when full year RPKs were down 65.8 percent versus 2019. Because comparisons between 2021 and 2020 results are distorted by the extraordinary impact of COVID-19, unless otherwise noted all comparisons are to the respective 2019 period, which followed a normal demand pattern.

International passenger demand in 2021 was 75.5 percent below 2019 levels. Capacity, (measured in available seat kilometres or ASKs) declined 65.3 percent and load factor fell 24.0 percentage points to 58.0 percent. Domestic demand in 2021 was down 28.2 percent compared to 2019. Capacity contracted by 19.2 percent and load factor dropped 9.3 percentage points to 74.3 percent. Total traffic for the month of December 2021 was 45.1 percent below the same month in 2019, improved from the 47.0 percent contraction in November, as monthly demand continued to recover despite concerns over Omicron. Capacity was down 37.6 percent and load factor fell 9.8 percentage points to 72.3 percent.

Download the IATA Air Passenger Market Analysis here.
Download the IATA Media Briefing on the Air Transport Industry here.
Read a transcript of IATA Director General Willie Walsh’s comments here.

Omicron travel restrictions slowed the recovery in international demand by about two weeks in December. International demand has been recovering at a pace of about four percentage points/month compared to 2019. Without Omicron, IATA said it would have expected international demand for the month of December to improve to around 56.5 percent below 2019 levels. Instead, volumes rose marginally to 58.4 percent below 2019 from -60.5 percent in November.

IATA Director General Willie Walsh at the 2021 annual general meeting in Boston. (PHOTO: IATA)

“Overall travel demand strengthened in 2021. That trend continued into December despite travel restrictions in the face of Omicron. That says a lot about the strength of passenger confidence and the desire to travel. The challenge for 2022 is to reinforce that confidence by normalising travel. While international travel remains far from normal in many parts of the world, there is momentum in the right direction. Last week, France and Switzerland announced significant easing of measures. And yesterday the UK removed all testing requirements for vaccinated travelers. We hope others will follow their important lead, particularly in Asia where several key markets remain in virtual isolation,” said Willie Walsh, IATA’s Director General.

International Passenger Markets

  • Asia-Pacific airlines’ full-year international traffic plunged 93.2 percent in 2021 compared to 2019, which was the deepest decline for any region. It fell 87.5 percent in the month of December, a bit better than the 89.8 percent decline in November. Full year capacity was down 84.9 percent compared to 2019. Load factor fell 44.3 percentage points to 36.5 percent.
  • European carriers saw a 67.6 percent traffic decline in 2021 versus 2019. Capacity fell 57.4 percent and load factor decreased 20.6 percentage points to 65.0 percent. For the month of December, traffic slid 41.5 percent compared to December 2019, an improvement over the 43.5 percent year-to-year decline in November.
  • Middle Eastern airlines’ annual passenger volumes in 2021 were 71.6 percent below 2019. Annual capacity fell 57.7 percent and load factor dropped 25.1 percentage points to 51.1 percent. December’s traffic was down 51.2 percent compared to December 2019, a solid pick-up from a 54.3 percent drop in November.
  • North American airlines’ full year traffic fell 65.6 percent compared to 2019. Capacity dropped 52.0 percent, and load factor sank 23.8 percentage points to 60.2 percent. December demand was down 41.7 percent compared to the same month a year-ago, a pick-up over a 44.6 percent drop in November.
  • Latin American airlines had a 66.9 percent full year traffic decline compared to 2019. Capacity fell 62.2 percent and load factor dropped 10.2 percentage points to 72.6 percent, the highest among regions. Traffic fell 40.4 percent for the month of December compared to December 2019, significantly bettering the 47.3 percent decline in November.
  •  African airlines’ international traffic fell 65.2 percent last year compared to 2019, which was the best performance among regions. Capacity dropped 56.7 percent, and load factor sank 14.1 percentage points to 57.3 percent. Demand for the month of December was 60.5 percent below the year-ago period, a deterioration from the 56.5 percent decline in November, owing to the impact of government travel restrictions in response to Omicron.

Domestic Passenger Markets

  • China’s domestic passenger traffic fell 24.4 percent in 2021 compared to 2019. It was down 39.6 percent for the month of December versus December 2019, which was an improvement compared to a 50.9 percent decline in November.
  • Russia’s domestic traffic rose 24.2 percent for the full year, and 23.2 percent for the month of December, an acceleration over the 17.5 percent rise in November. Russia was the only market to see growth in RPKs in 2021 compared to 2019.

“As COVID-19 continues to evolve from the pandemic to endemic stage, it is past time for governments to evolve their responses away from travel restrictions that repeatedly have been shown to be ineffective in preventing the spread of the disease, but which inflict enormous harm on lives and economies. A New Year’s resolution for governments should be to focus on building population immunity and stop placing travel barriers in the way of a return to normality,” said Walsh.

CARGO

Airlines around Asia are counting on cargo to help them through the pandemic. (PHOTO: Cebu Pacific)

IATA said global air freight markets showed that full-year demand for air cargo increased by 6.9 percent in 2021, compared to 2019 (pre-COVID levels) and 18.7 percent compared to 2020 following a strong performance in December 2021. This was the second-biggest improvement in year-on-year demand since IATA started to monitor cargo performance in 1990 (behind 2010’s 20.6 percent gain), outpacing the 9.8 percent rise in global goods trade by 8.9 percentage points. As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted, all comparisons below are to 2019 which followed a normal demand pattern.

Download the IATA Air Cargo Market Analysis here.

Global demand in 2021, measured in cargo tonne-kilometres was up 6.9 percent compared to 2019 (7.4 percent for international operations). Capacity in 2021, measured in available cargo tonne-kilometres (ACTKs), was 10.9 percent below 2019 (12.8 percent for international operations). Capacity remains constrained with bottlenecks at key hubs. Improvements were demonstrated in December; global demand was 8.9 percent above 2019 levels (9.4 percent for international operations).  This was a significant improvement from the 3.9 percent increase in November and the best performance since April 2021 (11.4 percent). Global capacity was 4.7 percent below 2019 levels (‑6.5 percent for international operations). The lack of available capacity contributed to increased yields and revenues, providing support to airlines and some long-haul passenger services in the face of collapsed passenger revenues. In December 2021, rates were almost 150 percent above 2019 levels.

Airlines and lessors around the world are converting passenger planes to freighters. (PHOTO: Airbus)

The cost-competitiveness of air cargo relative to that of sea-container shipping remains favourable, IATA said. The recent surge in COVID-19 cases in many advanced economies has created strong demand for PPE shipments, which are usually carried by air. Labour shortages, partly due to employees being in quarantine, insufficient storage space at some airports and processing backlogs continue to put pressure on supply chains. “Air cargo had a stellar year in 2021. For many airlines, it provided a vital source of revenue as passenger demand remained in the doldrums due to COVID-19 travel restrictions. Growth opportunities, however, were lost due to the pressures of labour shortages and constraints across the logistics system. Overall, economic conditions do point towards a strong 2022,” said Walsh.

The passenger to freighter conversion market is also showing improvement. (PHOTO: HAECO Xiamen)

December saw a relief in supply chain issues that enabled an acceleration of cargo growth. “Some relief on supply chain constraints occurred naturally in December as volumes decreased after peak shipping activity ended in advance of the Christmas holiday. This freed capacity to accommodate front-loading of some Lunar New Year shipments to avoid potential disruptions to flight schedules during the Winter Olympic games. And overall December cargo performance was assisted by additional belly-hold capacity as airlines accommodated an expected year-end boost to travel. As shortages of labor and storage capacity remain, governments must keep a sharp focus on supply chain constraints to protect the economic recovery,” said Walsh.

2021 Regional Performance

Changi remains a key cargo transshipment point for Asia. (PHOTO: Singapore government)

Strong variations were evident in the regional performance of air cargo in 2021 compared to 2019. North American carriers were the strongest performers, reporting an annual increase in international demand of 20.2 percent. Middle East and African carriers also reported double digit growth in international demand in 2021 (10.6 percent and 11.3 percent, respectively) compared to 2019. Asia-Pacific and European carriers saw international demand rise 3.6 percent in 2021 compared to 2019. And Latin American carriers were the only ones to record a contraction in international demand of 15.2 percent compared to 2019.

AIR CARGO YEAR TO DATE DEVELOPMENTS
(JAN-DEC 2021)
CTK ACTK CLF(%-PT)​2 CLF(LEVEL)​3
Total Market
6.9%
-10.9%
9.3%
56.1%
Africa
10.2%
-16.1%
11.4%
47.6%
Asia Pacific
0.2%
-18.0%
11.7%
64.0%
Europe
3.7%
-16.5%
12.5%
64.4%
Latin America
-15.4%
-32.6%
9.0%
44.1%
Middle East
10.5%
-10.1%
10.7%
57.4%
North America
19.8%
4.0%
6.0%
45.5%
  • Asia-Pacific airlines reported a rise in international demand of 3.6 percent in 2021 compared to 2019 and a fall in international capacity of 17.1 percent. In December airlines in the region posted an 8.8 percent increase in international demand compared to 2019. Demand for goods manufactured in the region remains strong, including PPE. International capacity remained constrained in December down 10 percent compared to the same month in 2019.
  • North American carriers posted a 20.2 percent increase in international demand in 2021 compared to 2019 and a growth in international capacity of 0.2 percent. The region was the only one to record a growth in capacity in 2021 compared to 2019. In December carriers in the region posted an increase of 20.5 percent in international demand. The region’s carriers continue to benefit from strong consumer demand for goods. International capacity grew 6.2 percent compared to December 2019.
  • European carriers reported a 3.6 percent increase in international demand in 2021 compared to 2019 and a fall in capacity of 17.4 percent. In December airlines posted an increase in international demand of 6 percent compared to 2019. International capacity was down 5.9 percent in December 2021 compared to pre-crisis. European carriers have been significantly affected by supply chain and airport congestion and localized capacity constraints.
  • Middle Eastern carriers reported an increase in international demand of 10.6 percent in 2021 compared to 2019 and a fall in international capacity of 10.1 percent. Growth decelerated towards the year-end, partly driven by a downward trend in volumes on the large Middle East-Asia route. In December airlines in the region recorded a 5.7 percent increase in international demand compared to December 2019. International capacity decreased by 9.2 percent in December compared to the same month in 2019.
  • Latin American carriers reported a decline in international demand of 15.2 percent in 2021 compared to 2019 and a fall in capacity of 30.2 percent. Airlines registered in Latin America had a challenging year, as several were engaged in lengthy restructuring processes. That said, the restructuring processes are coming to an end, and December’s performance was the best of the year, with carriers in the region reporting a 2.9 percent decline in international demand compared to December 2019. This was a significant improvement on the 13.4 percent decline the previous month. Capacity remained heavily constrained in December, down 26.1 percent on pre-crisis levels.
  • African airlines saw international demand grow 11.3 percent in 2021 compared to 2019 and a fall in international capacity of 14.6 percent. Growth in the region has been dynamic for most of the year, driven by the strength of the Africa-Asia route. In December, international demand grew by 7.6 percent year-on-year and international capacity fell 19.4 percent.

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