A July IATA survey of airline CFOs and Heads of Cargo suggests that, though the global sector is showing signs of recovery, the industry is not expected to return to pre-pandemic levels until 2023.

Notably, almost three-quarters (72%) of the surveyed carriers reported smaller losses as the pandemic got better under control in Q2 with significant cost reductions and moderate gains in passenger demand contributing to the improvement. On the other hand, 28% of the sample reported that COVID continues to have a major impact on their operations.

A similar number of respondents (73%) expect profitability to improve since they anticipate passenger traffic to recover further with the support of vaccine rollouts. They also expect that passenger confidence will pick up and concerns about safety of air travel will recede. However, 25% of the respondents expect no change or deterioration in net losses due to the risk that new COVID waves and resulting lockdowns weigh on air travel recovery.

Some respondents worried that cancellation of government aid programs might offset revenues from rising passenger traffic in the future.

Other key points:

• Due to the relief to airlines’ financials as air travel demand started to slowly recover in some markets, respondents have also become more optimistic about the future air travel volumes and profitability – 89% of the respondents anticipate that demand would recover with the reopening of markets. The remaining 11% expect no change in the current air traffic volumes due to new COVID waves and uncertainty about vaccine progress.

• The majority of the sample reported that passenger yields stayed at low levels in Q2, however, they are expected to improve in the next 12 months as demand improves. Similarly, cargo yields are expected to remain elevated, supporting airline revenues.

• 81% of the survey sample reported an increase in passenger volumes in Q2 2021 compared with Q2 last year when passenger traffic was de facto non-existent amidst large-scale travel bans and sharp capacity cuts.

• 55% of the respondents reported a reduction in their workforce in Q2 as airlines continued restructuring. On the other hand, expectations for the future improved as only 15% of respondents expect a further decrease in employment levels in the next 12 months compared with 24% in the April survey.

• The majority of the respondents (52%) expects air travel demand to recover to 2019 levels in 2023, which is consistent with IATA’s global passenger forecast. The North American region (42%) should lead the demand recovery while African routes should be the last to recover.