IATA: Pax demand still down, cargo continues growth trend

The International Air Transport Association (IATA) announced that both international and domestic travel demand showed significant momentum in July 2021 compared to June, but demand remained far below pre-pandemic levels. Extensive government-imposed travel restrictions continue to delay recovery in international markets. IATA also reported that international cargo traffic remain strong. (Download the IATA July Passenger Market Analysis here.) Because comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted all comparisons are to July 2019, which followed a normal demand pattern. Total demand for air travel in July 2021 (measured in revenue passenger kilometres or RPKs) was down 53.1% compared to July 2019. This is a significant improvement from June when demand was 60% below June 2019 levels. International passenger demand in July was 73.6% below July 2019, bettering the 80.9% decline recorded in June 2021 versus two years ago. All regions showed improvement and North American airlines posted the smallest decline in international RPKs (July traffic data from Africa was not available). Total domestic demand was down 15.6% versus pre-crisis levels (July 2019), compared to the 22.1% decline recorded in June over June 2019. Russia posted the best result for another month, with RPKs up 28.9% vs. July 2019. “July results reflect people’s eagerness to travel during the Northern Hemisphere summer. Domestic traffic was back to 85% of pre-crisis levels, but international demand has only recovered just over a quarter of 2019 volumes. The problem is border control measures. Government decisions are not being driven by data, particularly with respect to the efficacy of vaccines. People traveled where they could, and that was primarily in domestic markets. A recovery of international travel needs governments to restore the freedom to travel. At a minimum, vaccinated travelers should not face restrictions. That would go a long way to reconnecting the world and reviving the travel and tourism sectors,” said Willie Walsh, IATA’s Director General. IATA Director General William “Willie” Walsh, former CEO of IAG (PHOTO: Stuart Bailey) “As the Northern Hemisphere summer travel season draws to a close it is clear that too many governments missed the opportunity to apply a risk-based approach to managing their borders. The growing number of fully vaccinated travelers and the prevalence of testing provided the chance to restore international connectivity and bring much needed relief to economies that are heavily reliant on travel and tourism. Instead, governments continued to behave as if it was the summer of 2020. Economies and the labor force will pay the price for decisions that were made not based on science, but on political expediency. Governments have rightly urged their populations to be vaccinated; now governments need to have confidence in the benefits of vaccinations—including the freedom to travel,” said Walsh. International Passenger Markets Because Singapore Airlines has no domestic network, its Changi Airport base is still almost a ghost town in 2021. A lone student waits to say goodbye to a friend in a nearly deserted departure hall. (PHOTO: Matt Driskill) European carriers saw their July international traffic decline 64.2% versus July 2019, significantly bettering the 77.0% decrease in June compared to the same month in 2019. Capacity dropped 53.8% and load factor fell 19.9 percentage points to 69.0%. Asia-Pacific airlines’ July international traffic fell 94.2% compared to July 2019, barely improved over the 94.7% drop registered in June 2021 versus June 2019 as the region continues to have the strictest border control measures. Capacity dropped 86.0% and the load factor was down 48.2 percentage points to 34.3%, by far the lowest among regions. Middle Eastern airlines posted a 74.5% demand drop in July compared to July 2019, surpassing the 79.2% decrease in June, versus the same month in 2019. Capacity declined 59.5%, and load factor deteriorated 30.1 percentage points to 51.3%.  North American carriers’ July demand fell 62.1% compared to the 2019 period, much improved on the 69.4% decline in June versus two years ago. Capacity sank 52.0%, and load factor dipped 18.6 percentage points to 69.3%. Latin American airlines saw a 66.3% drop in July traffic, compared to the same month in 2019, improved over the 69.8% decline in June compared to June 2019. July capacity fell 60.5% and load factor dropped 12.6 percentage points to 72.9%, which was the highest load factor among the regions for the ninth consecutive month. Domestic Passenger Markets Australia’s domestic traffic sank further from a 51.4% decline in June versus the same month in 2019, to a 75.4% decline in July versus two years ago, amid stricter domestic lockdowns in response to a spike in the Delta variant. US domestic traffic continued to recover in July, and was down just 7.7% compared to July 2019, improved from a 14.0% decline in June versus June 2019. Strong Cargo Demand Continues in July Cathay, like other airlines, is relying on cargo to help carry it through the pandemic. (PHOTO: Cathay Pacific) IATA said July 2021 data for global air cargo markets showing that demand continued its strong growth trend.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 July 2019 which followed a normal demand pattern. (Download the IATA July Cargo Market Analysis here.) Global demand, measured in cargo tonne-kilometres (CTKs), was up 8.6% compared to July 2019. Overall growth remains strong compared to the long-term average growth trend of around 4.7%. The pace of growth slowed slightly compared to June which saw demand increase 9.2% (against pre-COVID-19 levels). Capacity continues to recover but is still 10.3% down compared to July 2019. Economic conditions continue to support air cargo growth: The July export orders component of the manufacturing Purchasing Managers Indices (PMIs) was 52.7%, indicating a short-term boost to demand if those orders are shipped by air. The inventory-to-sales ratio remains low ahead of the peak year-end retail season. Air cargo market detail – July 2021 World         July 2021 (% ch vs the same month in 2019)                                       share 1 CTK ACTK CLF (%-pt)2 CLF (level)3 TOTAL MARKET                               100.0% 8.6% -10.3% 9.5% 54.4% Asia Pacific                                         32.6% 1.2% -19.8% 13.6% 65.4% Europe                                                   22.3% 6.1% -14.1% 11.3% 59.8% Latin America                                       2.4% -9.8% -17.7% 3.4% 38.7% Middle East                                         13.0% 11.3% -6.1% 8.4% 53.6% North America                                   27.8% 21.2% 1.8% 7.1% 44.3% International                                      85.5% 8.9% -13.6% 13.0% 62.8% Asia Pacific                                         29.1% 4.4% -19.5% 17.6% 76.5% Europe                                                   21.9% 6.0% -15.4% 12.7% 63.0% Latin America                                       2.0% -10.2% -25.3% 8.7% 51.8% Middle East                                         13.0% 11.3% -6.1% 8.4% 54.0% North America                                   17.5% 20.5% -6.6% 12.6% 55.9%   “July was another solid month for global air cargo demand. Economic conditions indicate that the strong growth trend will continue into the peak year-end demand period. The Delta variant of COVID-19 could bring some risks. If supply chains and production lines are disrupted, there is potential for a knock-on effect for air cargo shipments,” said IATA’s  Walsh. July Regional Performance Airlines and lessors around the world are converting passenger planes to freighters. (PHOTO: Airbus) Asia-Pacific airlines saw demand for international air cargo increase 4.4% in July 2021 compared to the same month in 2019, and an improvement compared to the previous month’s 3.9% expansion. Demand is being affected by an easing of momentum in key activity indicators in Asia, and by congested supply chains. North American carriers posted a 20.5% increase in international demand in July 2021 compared to July 2019. This was in line with June’s performance (19.8%) and the strongest of all regions. New export orders and demand for faster shipping times are underpinning the North American performance. European carriers posted a 6.0% increase in demand in July 2021 compared to the same month in 2019. This was a marginal decrease compared to the previous month (6.8%). Manufacturing activity, orders and supplier delivery times are still favorable to air cargo. Middle Eastern carriers posted an 11.3% rise in international cargo volumes in July 2021 versus July 2019. This was a decrease compared to the previous month (15.8%). Some routes, however, are still posting strong performance, for example on the large Middle East–Asia trade lanes. Latin American carriers reported a decline of 10.2% in international cargo volumes in July compared to the 2019 period, an improvement from the -21.5% fall recorded in June. Although Latin America continues to show the weakest regional performance, the comparison with pre-crisis traffic levels has been highly volatile in recent months. Several trade routes to/from Latin America are performing well, such as North-Central and North-South America and Europe-South America, confirming that demand for air cargo in the region is recovering from the crisis,  African airlines’ cargo demand statistics were unavailable at time of going to press. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Kay Rolland at [email protected]