IATA’s revised outlook for airline industry performance in 2020 and 2021 says deep industry losses will continue into 2021, even though performance is expected to improve over the period of the forecast.
A net loss of US$118.5 billion is expected for 2020 (greater than the $84.3 billion forecast in June), while a net loss of $38.7 billion is expected in 2021 (more than the $15.8 billion forecast in June).
Performance factors in 2021 will show improvements over 2020 and the second half of 2021 is expected to see improvements after a difficult 2021 first half, says the International Air Transport Association. However, aggressive cost-cutting by carriers combined with increased demand during 2021 (due to the re-opening of borders with testing and/or the widespread availability of a vaccine) is expected to see the industry turn cash-positive in the fourth quarter of 2021, which is earlier than previously forecast.
“This crisis is devastating and unrelenting. Airlines have cut costs by 45.8%, but revenues are down 60.9%. The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion,” says Alexandre de Juniac, IATA’s Director General and CEO, who announced this week that he will be stepping down next March.
“This loss will be reduced sharply by $80 billion in 2021, but the prospect of losing $38.7 billion next year is nothing to celebrate,” he added. “We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose.
“The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses. Were it not for the $173 billion in financial support by governments we would have seen bankruptcies on a massive scale.”
Passenger volumes are not expected to return to 2019 levels until 2024 at the earliest, with domestic markets recovering faster than international services
Earlier this week, IATA welcomed the release of a report by the International Civil Aviation Organization (ICAO) that provides a risk-based tool for using testing programs that could alleviate quarantine requirements.
“Momentum is building in support of our call for systematic testing to safely re-open borders without quarantine measures,” said de Juniac, adding “Health authorities are beginning to explore how testing could supersede quarantine to stop the cross-border spread of the virus. Encouraging results from testing pilot programs should now give states the confidence to move forward quickly.”
IATA has also announced that it is in the final development phase of the IATA Travel Pass, a digital health pass designed to support the safe reopening of borders.
The Travel Pass will manage and verify the secure flow of necessary testing or vaccine information among governments, airlines, laboratories, and travellers. A cross-border pilot is scheduled for later this year and the launch slated for early 2021.