The world’s leading trade group for the airline industry said Tuesday (9 June) that global airlines will lose more money than ever before because of the COVID-19 pandemic, border closures and a near total shutdown of international flights. The one bright spot is air cargo, but even that is slowing, according to the International Air Transport Association (IATA).
In its weekly media conference call, IATA Chief Economist Brian Pearce said the association was expecting, as it said previously, that April air traffic would be the “low point” around the world barring a second wave of the virus arising and the world could expect to see a “phased reopening” of domestic, regional and international markets depending upon how deep the economic crisis facing the world goes because of the pandemic. Pearce said the world could expect a “fairly decent rise in traffic in the second half of the year” because there was “considerable pent-up demand for travel”. He said cargo traffic was still in strong demand but would still see a 28 percent drop in air cargo volume for the year.
IATA’s Pearce said the grounding of the world’s passenger fleet had created a “crunch” in belly-hold cargo and there was a capacity shortage in cargo relative to demand. He added: “While (cargo) rates have risen and revenues are higher today than compared to last year, for airlines that’s not enough”.
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Pearce also said the amount of debt airlines are incurring just to remain solvent is a problem and while some governments have stepped in with aid, that assistance sometime carries conditions that will make it hard to airlines to return to profit for years. He estimated that the world’s airlines will have a total of US$550 billion in debt by the end of 2020.
IATA officials said on the call that global airlines will not return to profit until at least 2022 or 2023 simply because countries around the world will be slow to open their borders to international traffic.
“Our research shows that people will return to flying as soon as borders open. That is why we worked for and strongly support ICAO’s Take-off plan to re-start aviation. We must be prepared for the eventual recovery with global measures that are universally implemented. That will give governments the confidence to open borders. And it should give passengers the confidence to fly,” said IATA Director General Alexandre de Juniac.
“In March we had a disorderly shut-down of the industry. The ICAO guidelines, agreed by governments, are at the core of an orderly re-start—provided the guidelines are universally implemented, harmonised and mutually recognised. This would be a stark contrast to post 9/11 when everybody essentially did their own thing and we have spent 20 years sorting out the differences. And the other re-assuring development compared to 9.11 is the agreement that measures are temporary and will be evaluated often—as science, technology and medicine advance. With a continuous updating—including the removal of measures no longer needed for safety—passenger confidence should remain high,” de Juniac said.