Dubai: Global airline industry could burn cash in the range of $75 billion to $95 billion this year, much higher than the previously estimated figure of $48 billion, according to the International Air Transport Association (IATA).
“It’s really not clear how governments will react - we think they should be lowering travel restrictions once significant proportion of the population is vaccinated,” said Brian Pearce, IATA’s Chief Economist, during a virtual webinar on Wednesday.
“We still think the industry will be burning through cash in the fourth quarter of this year,” said Pearce. “We won’t see the industry returning to generate cash and generate profits until 2022”
Demand is weak
In 2021, global air traffic – measured in terms of revenue passenger kilometers – may just be 38 per cent of 2019 levels. And if governments are more cautious towards relaxing travel restrictions, that figure could go further lower to 33 per cent.
IATA had previously estimated a recovery to 51 per cent.
“There’s an additional risk today with respect to the way in which governments may or may not lower restrictions on international travel,” said Pearce. “The science is that governments will start lowering those barriers once the vulnerable parts of the population are vaccinated.”
“The consequence of all that is that the recovery in passenger revenues could well be slower than we were expecting,” he added.
Travel Pass update
IATA launched the first version of the travel pass in December and the industry body has been piloting that with Singapore Airlines.
“We will be piloting with a number of other different airlines from mid-March, and then going the whole way through to April,” said Alan Murray Hayden, Head Airport Passenger & Security Products, IATA.
The first version of the platform will be rolled out in March and the second one, with additional features, will see an April launch.
“Once there is a little bit more clarity on how governments are going to issue proof of vaccination, we will then embed that functionality into the application at that time,” said Hayden