Stock India airport passengers
A halt on outbound flights from India will push back prospects for airlines. For the time being, those countries with sizable domestic airline operations stand a much better chance. Image Credit: PTI

Dubai: This is turning out to be another catastrophic year for the airline industry, as countries take strict measures to combat fresh outbreaks of the COVID-19 and its variations. The ban on incoming flights from India for a limited period and uncertainties over UK’s relaunch of international flights will add to these concerns.

Which is why in its latest bleak forecasts, IATA (International Air Transport Association) expects airlines to lose a whopping $47.7 billion this year – and an increase on the earlier estimate of $38 billion.

“Government-imposed travel restrictions continue to dampen the strong underlying demand for international travel,” said Willie Walsh, IATA’s Director-General. “This crisis is longer and deeper than anyone could have expected - losses will be reduced from 2020, but the pain of the crisis increases. There is optimism in domestic markets, where aviation’s hallmark resilience is demonstrated by rebounds in markets without internal travel restrictions.”

Globally, airlines are estimated to have lost $126.4 billion last year, and it could have been much worse had it not been for governments coming up with support measures.

Health pass

In recent weeks, more airlines are trialling the IATA Travel Pass, which is the COVID-19 health info that will speed up procedures for passengers with airlines and at airports. Abu Dhabi’s Etihad Airways is running it until end May on select routes to the US and Canada.

But will this speed up recovery? IATA estimates that passenger traffic - measured in revenue passenger kilometres or RPKs - will recover to 43 per cent of 2019 levels over the year. While that is a 26 per cent improvement on 2020, it is far from a recovery.

Domestic markets will improve faster than international travel, said IATA. Overall passenger numbers are expected to reach 2.4 billion. That is an improvement on the nearly 1.8 billion who travelled in 2020, but well below the 2019 peak of 4.5 billion.

More cash burn

“Despite an estimated 2.4 billion people travelling by air in 2021, airlines will burn through a further $81 billion of cash,” he added.

International passenger traffic remained 86.6 per cent down on pre-crisis levels over the first two months of 2021. Vaccination progress combined with widespread testing capacity should result in international travel reaching 34 per cent of 2019 demand levels in the second-half of the year.

Domestic passenger traffic is expected to perform significantly better in markets such as China, the US and even India. IATA estimates that domestic markets could recover to 96 per cent of pre-crisis 2019 levels in the second-half of 2021. That would be a 48 per cent improvement on 2020 performance.

“This is driven by strong GDP growth, accumulated consumer disposable cash during lockdowns, pent-up demand, and the absence of domestic travel restrictions,” the report said.

Cargo, which outperformed the passenger business throughout the crisis, will continue to grow throughout 2021. Demand for cargo is expected to grow by 13.1 per cent over 2020. Meanwhile, total cargo volumes will reach 63.1 million tonnes this year - nearly at the pre-crisis peak of 63.5 million tonnes which occurred in 2018.