GENEVA: The International Air Transport Association (IATA) has released an updated global passenger forecast showing that the recovery in traffic has been slower than had been expected.
In the base case scenario, the trade body expected global passenger traffic (measured in revenue passenger kilometres) 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 revenue passenger kilometres. 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 per cent compared to 2019, worsened from the April forecast of 46 per cent. June 2020 passenger traffic foreshadowed the slower-than-expected recovery. Traffic, measured in revenue passenger kilometres, fell 86 per cent compared to the year-ago period. That is only slightly improved from a 91 per cent contraction in May. This was driven by rising demand in domestic markets, particularly China. The June load factor set an all-time low for the month at 58 per cent. The more pessimistic recovery outlook is based on a number of recent trends.
Slow virus containment in the US and developing economies: Although developed economies outside of the US have been largely successful in containing the spread of the virus, renewed outbreaks have occurred in these economies, and in China. Furthermore, there is little sign of virus containment in many important emerging economies, which in combination with the US, represent around 40 per cent of global air travel markets. Their continued closure, particularly to international travel, is a significant drag on recovery.
Reduced corporate travel: Corporate travel budgets are expected to be very constrained as companies continue to be under financial pressure even as the economy improves. In addition, while historically GDP growth and air travel have been highly correlated, surveys suggest this link has weakened, particularly with regard to business travel, as video conferencing appears to have made significant inroads as a substitute for in-person meetings.]
Weak consumer confidence: While pent-up demand exists for VFR (visiting friends and relatives) and leisure travel, consumer confidence is weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19. Some 55 per cent of respondents to IATA’s June passenger survey do not plan to travel in 2020.
Owing to these factors, IATA’s revised baseline forecast is for global enplanements to fall 55 per cent in 2020 compared to 2019 (the April forecast was for a 46 per cent decline).
Passenger numbers are expected to rise 62 per cent in 2021 off the depressed 2020 base, but still will be down almost 30 per cent compared to 2019.
A full recovery to 2019 levels is not expected until 2023, one year later than previously forecast.
“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak.
“What improvement we have seen has been domestic flying. International markets remain largely closed.
“Consumer confidence is depressed and not helped by the UK’s weekend decision to impose a blanket quarantine on all travellers returning from Spain.
“And in many parts of the world infections are still rising.
“All of this points to a longer recovery period and more pain for the industry and the global economy,” said Alexandre de Juniac, IATA Chief Executive.
