Air Travel Recovery Delayed?

The International Air Transport Association (IATA) released an updated global passenger forecast showing that the recovery in traffic has been slower than had been expected.

In the base case scenario:

·       Global passenger traffic (revenue passenger kilometres or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.

·       The recovery in short haul travel is still expected to happen faster than for long haul travel. As a result, passenger numbers will recover faster than traffic measured in RPKs. Recovery to pre-COVID-19 levels, however, will also slide by a year from 2022 to 2023. For 2020, global passenger numbers (enplanements) are expected to decline by 55% compared to 2019, worsened from the April forecast of 46%.

The more pessimistic recovery outlook is based on a number of recent trends:

·         Slow virus containment in the US and developing economies

·         educed corporate travel

·          Weak consumer confidence

Owing to these factors, IATA’s revised baseline forecast is for global enplanements to fall 55% in 2020 compared to 2019 (the April forecast was for a 46% decline). Passenger numbers are expected to rise 62% in 2021 off the depressed 2020 base, but still will be down almost 30% compared to 2019. A full recovery to 2019 levels is not expected until 2023, one year later than previously forecast.

Meanwhile, since domestic markets are opening ahead of international markets, and because passengers appear to prefer short haul travel in the current environment, RPKs will recover more slowly, with passenger traffic expected to return to 2019 levels in 2024, one year later than previously forecast. Scientific advances in fighting COVID-19 including development of a successful vaccine, could allow a faster recovery. However, at present there appears to be more downside risk than upside to the baseline forecast.

Image: www.theedgemarkets.com

Reference:

Recovery Delayed as International Travel Remains Locked Down, International Air Transport Association, 28 July 2020