The International Air Transport Association (IATA) announced that the recovery of passenger demand continued to be disappointingly slow in October and cargo demand, while slightly improved, grew at a slower pace than in September.
Total demand (measured in revenue passenger kilometres or RPKs) was down 70.6 percent compared to October 2019. This was just a modest improvement from the 72.2 percent year-to-year decline recorded in September. Capacity was down 59.9 percent compared to a year ago and load factor fell 21.8 percentage points to 60.2 percent.
Download the October Market Analysis here.
Download the IATA Update on Air Travel here.
International passenger demand in October was down 87.8 percent compared to October 2019, virtually unchanged from the 88.0 percent year-to-year decline recorded in September. Capacity was 76.9 percent below previous year levels, and load factor shrank 38.3 percentage points to 42.9 percent. Domestic demand drove what little recovery there was, with October domestic traffic down 40.8 percent compared to the prior year. This was improved from a 43.0 percent year-to-year decline in September. Capacity was 29.7 percent below 2019 levels and the load factor dropped 13.2 percentage points to 70.4 percent.
“Fresh outbreaks of COVID-19 and governments’ continued reliance on heavy-handed quarantines resulted in another catastrophic month for air travel demand. While the pace of recovery is faster in some regions than others, the overall picture for international travel is grim. This uneven recovery is more pronounced in domestic markets, with China’s domestic market having nearly recovered, while most others remain deeply depressed,” said Alexandre de Juniac, IATA’s director general and CEO.
“This crisis is unrelenting. Our latest economic outlook is for airlines to lose US$118.5 billion this year, or US$66 for every passenger carried. Assuming borders re-open by mid-2021, the industry will ‘only’ lose US$38.7 billion in 2021. Now is the time for governments to step up. The US$173 billion of support provided to date has enabled the industry to survive, but more is required to carry the industry through to next summer. IATA has identified a range of market stimulation options that will support the viability of air routes while encouraging people to travel. Without aviation’s US$3.5 trillion contribution to global GDP, there can be no broader economic recovery,” said de Juniac.
International Passenger Markets
- Asia-Pacific airlines’ October traffic collapsed 95.6 percent compared to the year-ago period, which was unchanged from September. The region continued to suffer from the steepest traffic declines. Capacity plummeted 88.5 percent and load factor sagged 49.4 percentage points to 30.3 percent, the lowest among regions.
- European carriers’ October demand sank 83.0 percent versus a year ago, worsened from an 81.2 percent decline in September. For a second consecutive month, Europe was the only region to see a deterioration in traffic. Capacity contracted 70.4 percent and load factor fell by 36.7 percentage points to 49.5 percent.
- Middle Eastern airlines saw an 86.7 percent traffic drop for October, improved from an 89.3 percent demand drop in September. Capacity dived 73.6 percent, and load factor declined 36.6 percentage points to 37.0 percent.
- North American carriers’ traffic tumbled 88.2 percent in October, a slight improvement from a 91.0 percent decline in September. Capacity plunged 73.1 percent, and load factor dropped 46.2 percentage points to 36.2 percent.
- Latin American airlines experienced an 86.0 percent demand drop in October, compared to the same month last year. The region showed the greatest improvement on September when year-on-year demand was down 92.3 percent. October capacity was 80.3 percent down and load factor dropped 23.5 percentage points to 57.7 percent, which was highest among the regions.
- African airlines’ traffic sank 78.6 percent in October, improved from an 84.9 percent drop in September and the best performance among the regions. Capacity contracted 67.5 percent, and load factor fell 23.8 percentage points to 45.5 percent.
Domestic Passenger Markets
- China’s domestic traffic was down just 1.4 percent in October compared to October a year ago. The domestic economy was close to normality and low fares and so-called ’all you can fly’ deals boosted demand.
- Russia’s domestic traffic slipped back into negative numbers in October, down 10 percent after two months of growth. New COVID cases have taken their toll on travelers’ confidence, despite few domestic travel restrictions.
CARGO
IATA said October data for global air freight markets showing that air cargo demand continued to improve but at a slower pace than the previous month and remains below previous year levels. Global demand, measured in cargo tonne-kilometres (CTKs), was 6.2 percent below previous-year levels in October (-7.5 percent for international operations). That is an improvement from the 7.8 percent year-on-year drop recorded in September. However, the pace of recovery in October was slower than in September with month-on-month demand growing 4.1 percent (1.1 percent for international).
Download the IATA October Cargo Analysis here.
Global capacity, measured in available cargo tonne-kilometres (ACTKs), shrank by 22.6 percent in October (‑24.8 percent for international operations) compared to the previous year. That is nearly four times larger than the contraction in demand, indicating the continuing and severe capacity crunch. Strong regional variations continue with North American and African carriers reporting year-on-year gains in demand (+6.2 percent and +2.2 percent respectively), while all other regions remained in negative territory compared to a year earlier.
“Demand for air cargo is coming back—a trend we see continuing into the fourth quarter. The biggest problem for air cargo is the lack of capacity as much of the passenger fleet remains grounded. The end of the year is always peak season for air cargo. That will likely be exaggerated with shoppers relying on e-commerce—80 percent of which is delivered by air. So the capacity crunch from the grounded aircraft will hit particularly hard in the closing months of 2020. And the situation will become even more critical as we search for capacity for the impending vaccine deliveries,” said de Juniac.
Regional Performance
- Asia-Pacific airlines saw demand for international air cargo fall 11.6 percent in October 2020 compared to the same month a year earlier. This was an improvement from the 14.6 percent fall in September 2020 and the second consecutive month of improvement. International capacity remained constrained in the region, down 28.7 percent. However, this was an improvement over the 31.8 percent fall in capacity the previous month. The region’s airlines reported the highest international load factor indicating a solid appetite for air cargo services.
- North American carriers posted a 1.3 percent increase in international demand in October compared to the previous year—the second month of growth in 10 months. This strong performance compared to the rest of the industry was driven by the Asia-North America routes, reflecting rising e-commerce demand for products manufactured in Asia and smaller capacity declines than other regions. The region’s domestic market decelerated slightly from September but remained robust. International capacity decreased by 16.6 percent.
- European carriers reported a decrease in demand of 11.9 percent in October compared to the previous year. This was an improvement from the 15.6 percent fall in September 2020. Air cargo in the region has been largely unaffected by the resurgence of the COVID-19 virus. International capacity decreased 28 percent an improvement from the 32.6 percent fall the previous month.
- Middle Eastern carriers reported a decline of 1.9 percent in year-on-year international cargo volumes in October, unchanged from September. However, the pace of recovery in October was slower than in September with month-on-month demand, improving 6.0 percent and 2.5 percent respectively. The weaker performance is driven by less demand in Africa-Middle East trade lanes. International capacity decreased by 22.7 percent.
- Latin American carriers reported a decline of 12.5 percent in international cargo volumes in October compared to the previous year. This was a significant improvement from the 22.2 percent fall in September 2020. The pace of month-on-month recovery was the strongest of all regions in October with demand climbing by 4 percent. The region’s improved year-on-year performance can be partly attributed to weak growth in the same period last year. However, improving operating conditions in a few key markets including Brazil and recovering cargo capacity also contributed. International capacity decreased 29.1 percent compared with up from 32.1 percent in September.
- African airlines saw demand increase by 2.8 percent year-on-year in October. This was lower than the 12.1 percent growth in September. Despite this the region still posted the strongest increase in international demand. The slight weakening in performance can be attributed to a slowdown in the Asia-Africa market where demand decelerated by 19 percentage points year-on-year. International capacity decreased by 20.8 percent.
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