IATA has once again revised down its pessimistic outlook. This new bleaker outlook is based on more recent passenger data which is even weaker than under its previous “dire” forecast. The new data has resulted in a longer forecast recovery period for the airline industry. It is now expected that recovery to pre-COVID 19 passenger levels will not occur before 2024. In May IATA forecast a return to 2019 levels “only in 2023”.
Based on its latest Air Passenger Market Analysis for June, they have just released an interim update to their long-term Air Passenger forecasts to take into account their evolving understanding of the trajectory of COVID-19 and its impact on the wider economy and air travel.
The data confirms that air travel reached a turning point in April, with continuing signs of a very modest improvement in May and June. But it needs to be remembered that this recovery is from a very low level. Overall, air travel demand is down by 58.4% in the first half of 2020 compared to the same period of last year. IATA compares this to the 6 months following 9/11 (the most severe aviation crisis prior to COVID -19) when passenger demand dropped by 12%!
There is a concern that the trajectory of new COVID-19 cases has been worse than they expected in their April forecast, once again a dire forecast proves to be too optimistic! IATA believes that business confidence has rebounded and most likely GDP, however, consumer confidence remains subdued.
The expectation is that there will be “a degree of pent-up demand to visit friends and family in the near term as travel restrictions are lifted but we are less optimistic about the return of business (in particular) and leisure travel.” The reluctance of people to go abroad for holidays is already having a noticeable effect and is consistent with recent passenger surveys.
In April, around 60% of respondents indicated that they would be likely to return to travel within a few months of the pandemic having subsided. In June, this figure had slipped to 45%. The largest share of people (36%) expect to fly in around six months from containment (up 8% on this occasion), while 14% of respondents expect to wait around 12 months – around double the share from both the February and April surveys. These surveys show very clearly that passengers are becoming more reluctant to fly as the crisis drags on.
Although airlines are adding capacity and making more flights available following the lockdown easing, passengers
seem to have been hesitant to travel. The global passenger load factor (an indicator of how full the airplane is) remained at an all-time low for another month, at 57.6% compares to 84.4% in June 2019.
IATA have consequently revised down their passenger forecast over the next five-year and expect passenger journeys to decline by a little more than 60% in 2020 compared to 2019, with a return to pre-COVID 19 levels not occurring before 2024.
Let’s hope that these dire forecasts do not, once again, prove to be too optimistic!