Airline losses top $200 billion due to COVID pandemic

11
October 05, 2021
airlines

Airlines losses could top $200 billion over the 2020-2022 period because of the devastating impact of COVID on air travel the International Air Transport Association has warned.

The losses are made up of $137.7 billion in 2020, $51.8 billion in 2021, and $11.6 billion in 2022 for a total of $201 billion.

IATA said that demand (measured in RPKs) is expected to stand at 40 percent of 2019 levels for 2021, rising to 61 percent in 2022.

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Total passenger numbers are expected to reach 2.3 billion in 2021. This will grow to 3.4 billion in 2022 which is similar to 2014 levels and significantly below the 4.5 billion travelers of 2019.

Robust demand for air cargo is expected to continue with 2021 demand at 7.9 percent above 2019 levels, growing to 13.2 percent above 2019 levels for 2022.

IATA’s Director-General Willie Walsh said that “the magnitude of the COVID-19 crisis for airlines is enormous. Over the 2020-2022 period total losses could top $200 billion. To survive airlines have dramatically cut costs and adapted their business to whatever opportunities were available. That will see the $137.7 billion loss of 2020 reduce to $52 billion this year. And that will further reduce to $12 billion in 2022. We are well past the deepest point of the crisis. While serious issues remain, the path to recovery is coming into view. Aviation is demonstrating its resilience yet again.

“The air cargo business is performing well, and domestic travel will near pre-crisis levels in 2022. The challenge is international markets which remain severely depressed as government-imposed restrictions continue.

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“People have not lost their desire to travel as we see in solid domestic market resilience. But they are being held back from international travel by restrictions, uncertainty, and complexity. More governments are seeing vaccinations as a way out of this crisis. We fully agree that vaccinated people should not have their freedom of movement limited in any way. In fact, the freedom to travel is a good incentive for more people to be vaccinated. Governments must work together and do everything in their power to ensure that vaccines are available to anybody who wants them,” said Walsh.

“Re-establishing global connectivity, the 11.3 million jobs (pre-COVID-19) in the aviation industry, and the $3.5 trillion of GDP associated with travel and tourism should be priorities for governments.

“Aviation is resilient and resourceful, but the scale of this crisis needs solutions that only governments can provide. Financial support was a lifeline for many airlines during the crisis. Much of that—approximately $110 billion— is in the form of support that needs to be paid back. Combined with commercial borrowing the industry is now highly leveraged. We don’t want handouts, but wage support measures to retain critical skills may be necessary for some airlines until governments enable international travel at scale. And regulatory alleviations—like continued slot wavers while international traffic recovers—will be needed well into 2022,” said Mr. Walsh.

IATA said that vaccinations are proving to be a key driver for government relaxation of border control measures. Quick progress, with some exceptions, of vaccine distribution in developed economies is progressively giving governments the confidence to re-open borders and people the confidence to travel. Parts of the world with slower vaccine distribution (developing economies and some developed economies in the Asia Pacific) will take longer to see an industry recovery.