Airlines Expect Slow Return To Growth, With Demand Down 41% In 2021

IATA presented forecasts Wednesday for a slow recovery for the airline industry, with demand expected to be up to 41% below previously projected levels in 2021, and the industry lagging 10% behind previous growth projections as far off as 2025.

IATA’s Chief Economist, Brian Pearce, presented new figures that show the average trip length falling sharply, favoring domestic markets opening first.

International demand is not expected to return to 2019 levels until 2023-24.

A barrier to the recovery of the aviation sector continues to be the need to establish universal protocols for safe air travel that are agreed upon by governments. Instead, recent developments, like the new imposition of a 14-day quarantine period for visitors announced in the UK and in Spain, are likely to have a dampening effect on demand.

IATA’s Director General and CEO decried the imposition of quarantines as counter-productive. “We are eager to fly and we are making proposals for governments to do it safely,” he said. “International travel cannot restart in these conditions.”

With Europe beginning the process of reopening to air travel, the European Commission granted airlines an important win, of sorts, by not requiring that airlines keep an empty seat between passengers on aircraft, leaving the decision to individual EU governments instead. But there are still many details for airlines to sort out as each government considers what is in their best interest and for the time being the burden is falling on airlines to draft individual health and safety protocols.

IATA has been working with ICAO to draft a common approach to ensuring passenger health and safety, while the pandemic is still ongoing. However, it will be up to governments to decide how they will best protect their citizens and prevent new spikes in coronavirus infections as air travel resumes. Airlines argue that the lack of a harmonized approach will only discourage and confuse passengers.

The return of transatlantic travel, particularly between North America and Europe, which is a strong driver of profitability for airlines on both sides of the pond, will still be delayed.

“That’s going to depend on what we see happening to travel restrictions..on agreed protocols to ensure that there isn’t a risk,” Pearce said. “One would think that European nations and European economies, which are very close to North American economies on trade, would be open in the near future, but it does depend on governments agreeing on these protocols.”

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