The International Air Transport Association (IATA) has published its latest forecasts for the recovery of the aviation industry this year, with analysis showing that airlines will burn through between $75 and $95 billion in 2021.
The figure is significantly worse than previous estimates of $48 billion, with IATA stating that “It is already clear that the first half of 2021 will be worse than earlier anticipated”.
Tightened travel restrictions in response to new Covid-19 variants are blamed for the gloomy outlook, with the industry now not expected to be cash positive until 2022.
The association said that forward bookings for this summer (July to August) are currently 78 per cent down on levels in February 2019.
IATA has published two scenarios for the rest of the year – an optimistic one where “travel restrictions [are] gradually lifted once the vulnerable populations in developed economies have been vaccinated, but only in time to facilitate tepid demand over the peak summer travel season in the northern hemisphere”.
This would result in 2021 demand being at 38 per cent of 2019 levels, and would result in cash burn of around $75 billion.
The pessimistic scenario would result from governments “retaining significant travel restrictions through the peak northern summer travel season”, and would result in airlines burning through $95 billion in cash this year.
Director General and CEO Alexandre de Juniac praised the UK for setting “a good example” by laying out a structure for re-opening based on an improvement in the Covid-19 situation, which he said “gives airlines a framework to plan the restart, even if it needs to be adjusted along the way”.
De Juniac – who is set to step down at the end of next month – also highlighted the growing number of carriers which have signed up to trials of the IATA Travel Pass, including Air New Zealand, Copa Airlines, Etihad Airways, Emirates, Qatar Airways, Malaysia Airlines, RwandAir, and Singapore Airlines.
“Efficient digital management of health credentials is vital to restart,” said de Juniac. “Manual processes will not be able to cope with volumes once the recovery begins. Digital solutions must be secure, work with existing systems, align with global standards and respect data privacy.”
“In developing the IATA Travel Pass these are fully in focus. The IATA Travel App will help to set the bar very high for managing health credentials, protecting against fraud and enabling a convenient travel process. While there is choice in the market for solutions, there should be no compromise on the fundamentals, or we risk failing systems, disappointed governments and travellers, and a delayed restart.”
“Speed is critical. Fraudulent Covid-19 test results are already proving to be an issue. And as vaccine programs ramp up governments are using paper processes and differing digital standards to record who has been vaccinated. These are not the conditions needed to support a successful restart at scale when governments open borders.
“The WHO, ICAO, and OECD are working on standards, but each day without them means the challenge gets bigger. We need an early conclusion by competent authorities that the industry can plan around.”
“Even as governments focus on managing the COVID-19 crisis, we must be thinking a step ahead to the plans, tools and standards needed to restart flying and energize the economic recovery from COVID-19. Working in partnership is nothing new for airlines or for governments. It’s how we have delivered safe, efficient, and reliable connectivity for decades.
For a year it’s been lockdowns and restrictions as vaccines were developed and testing capacity expanded. The reason for all the pain that this has caused is to keep people safe and to eventually be able to restore their well-being and that of the economy.
“With good news on vaccines and growing testing capacity, there is a glimmer of light at the end of the tunnel. So, it’s the time to ask governments for their restart plan and to offer any support from industry that could help.”