Dhaka: International Air Transport Association (IATA) has updated its global passenger forecast after the recovery in traffic has been slower than the association had expected.
In the base case scenario: global passenger traffic, as measured in revenue passenger kilometers (RPKs), will not return to pre-COVID19 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-COVID19 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, measures in RPK, fell 86.5 per cent compared to the year-ago period. That is only slightly improved from a 91 per cent contraction in May, driven by rising demand in domestic markets, particularly China. The June load factor set an all-time low for the month at 57.6 per cent.
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.
The more pessimistic recovery outlook is based on a number of recent trends: slow virus containment in the US and developing economies, reduced corporate travel, and weak consumer confidence
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.
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 COVID19 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.
June international traffic shrank by 96.8 per cent compared to June 2019, only slightly improved over a 98.3 per cent decline in May, year-over-year. Capacity fell 93.2 per cent and load factor contracted 44.7 percentage points to 38.9 per cent.
Asia-Pacific airlines’ June traffic plummeted 97.1 per cent compared to the year-ago period, little improved from the 98.1 per cent decline in May. Capacity fell 93.4 per cent and load factor shrank 45.8 percentage points to 35.6 per cent.
European carriers saw demand topple 96.7 per cent in June versus a year ago, compared to a 98.7 per cent decline in May. Capacity dropped 94.4 per cent and load factor lessened 35.7 percentage points to 52.0 per cent.
Middle Eastern airlines traffic collapsed 96.1 per cent for June against June 2019, compared with a 97.7 per cent demand drop in May. Capacity contracted 91.1 per cent, and load factor crumbled to 33.3 per cent, down 43.1 per cent percentage points compared to a year ago.
North American carriers had a 97.2 per cent traffic decline in June, barely improved from a 98.3 per cent decline in May. Capacity fell 92.8 per cent, and load factor dropped 53.8 percentage points to 34.1 per cent.
Latin American airlines suffered a 96.6 per cent demand drop in June compared to the same month last year, from a 98.1 per cent drop in May. Capacity fell 95.7 per cent and load factor sagged 17.7 percentage points to 66.2 per cent, which was the highest among the regions.
African airlines’ traffic sank 98.1 per cent in June, little changed from a 98.6 per cent demand drop in May. Capacity contracted 84.5 per cent, and load factor dived 62.1 percentage points to just 8.9 per cent of seats filled, lowest among regions.
Domestic passenger markets
Domestic traffic demand fell 67.6 per cent in June, improved from a 78.4 per cent decline in May. Capacity fell 55.9 per cent and load factor dropped 22.8 percentage points to 62.9 per cent.
China’s carriers continued to lead the recovery, with traffic down 35.5 per cent in June compared to the year-ago period, raised from a 46.3 per cent decline in May.
Japan’s airlines saw improved domestic demand after the state of COVID19 emergency was lifted in late May. Domestic RPKs fell by 74.9 per cent year-on-year in June, compared with around 90 per cent annual declines in the previous two months.
IATA urges governments to implement a layer of measures including the International Civil Aviation Organisation’s (ICAO’s) global guidelines for restoring air connectivity contained in ICAO’s Takeoff: Guidance for Air Travel through the COVID19 Public Health Crisis. IATA also sees potential for accurate, fast, scalable and affordable testing measures and comprehensive contact tracing to play a role in managing the risk of virus spread while re-connecting economies and re-starting travel and tourism.
“We need to learn to manage the risks of living with COVID19 with targeted and predictable measures that will safely re-build traveller confidence and shattered economies,” said Alexandre de Juniac, Director General and CEO, IATA.