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IATA: What are the recovery scenarios for the aviation industry?

As of June 2021, IATA’s baseline recovery scenario is that 2021 passengers will recover to 52% from pre-Covid-19 levels.

Then 2022 passengers at 88% and finally 2023 passengers at 105%.

However, the exact form of recovery depends on the efficacy and speed of the vaccine delivery.

International travel could remain well below pre-Covid-19 levels for some time, particularly with the rapid spread of the Delta variant.

Thus, IATA expects traffic to recover more slowly than GDP, with a lag of approximately 2 to 3 years.

Short-haul domestic flights will likely be the first to recover, with international traffic lagging behind.

Since the borders remain closed, international traffic is not expected to recover until later.

IATA booking data indicates that there is pent-up demand for leisure travel, but business travel, particularly the international component, will likely take longer to recover.

IATA

According to American Airlines, the global economic impact resulting from the pandemic has dramatically impacted the aviation industry.

Since the recession in February 2020, the overall industry has been slow to recover, with overall passenger traffic declining by nearly 66% in 2020, as measured by revenue per passenger kilometer (RPK).

Despite the launch of Covid-19 vaccines from Pfizer-BioNTech, Moderna, Oxford-AstraZeneca and others, the industry is still facing a challenging recovery.

Airlines around the world have seen their financial positions deteriorate dramatically.

Indeed, passenger revenue for the industry fell more than 60% during 2020, while net losses exceeded $ 118 billion.

As airlines faced substantial levels of cash burning, many airlines were forced to cease operations or go bankrupt, including Flybe, Virgin Australia, LATAM and Avianca.

The carriers that survived generally did so through a combination of debt, emergency cost reductions, and government support.

Overall, the airline industry racked up $ 651 billion in new debt during 2020, which will present challenges in the future.

While many airlines have been able to reduce their cash burn rate, the full form of the recovery is still unknown.

As demand remains depressed, other airlines are likely to face restructuring without further government help, according to American Airlines.

 

Redacción Opportimes

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