Amidst the continuing COVID-19 crisis, the airline industry expects to lose $201 billion for 2020-2022, the International Air Transport Association (IATA) announced at the opening of its Annual General Meeting on Thursday, Oct. 4, 2021.

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Already, these are “improved” projections with net industry losses expected to go down to $11.6 billion in 2022, after a $51.8 billion loss in 2021 (worsened from the $47.7 billion loss estimated in April).

“The magnitude of the COVID-19 crisis for airlines is enormous. Over the 2020-2022 period total losses could top $200 billion,” IATA’s Director General Willie Walsh reiterated.

“To survive, airlines have dramatically cut costs and adapted their business to whatever opportunities were available. That will see the $137.7 billion loss of 2020 reduce to $52 billion this year. And that will further reduce to $12 billion in 2022,” he explained.

However, “We are well past the deepest point of the crisis,” Walsh reassured. “While serious issues remain, the path to recovery is coming into view. Aviation is demonstrating its resilience yet again.”

Global passenger demand (measured in RPKs) is expected to stand at 40 percent of 2019 levels for 2021, rising to 61 percent in 2022.

Total passenger numbers are expected to reach 2.3 billion in 2021. This will grow to 3.4 billion in 2022, which is similar to 2014 levels and significantly below the 4.5 billion travelers of 2019.

Robust demand for air cargo is expected to continue with 2021 demand at 7.9 percent above 2019 levels, growing to 13.2 percent above 2019 levels for 2022.

The air cargo business is performing well, and domestic travel will near pre-crisis levels in 2022, IATA said.

The challenge is international markets which remain severely depressed as government-imposed restrictions continue.

“People have not lost their desire to travel as we see in solid domestic market resilience,” the IATA Director General pointed out.

“But they are being held back from international travel by restrictions, uncertainty and complexity.”

Domestic demand, with fewer restrictions in most countries, is driving the recovery. This year, domestic demand is expected to reach 73% of pre-crisis (2019) levels.

In 2022 domestic demand is expected to reach 93% of pre-crisis (2019) levels.

International demand is the slowest to recover owing to continuing restrictions on the freedom of movement across borders, quarantine measures and traveler uncertainty.

In 2021 international demand is expected to reach 22% of pre-crisis (2019) levels.

In 2022 international demand is expected to reach 44% of pre-crisis (2019) levels.

Cargo demand (measured in CTK) is strong as companies continue to re-stock. The World Trade Organization forecasts world trade to grow at 9.5% in 2021 and 5.6% in 2022.

In 2021, cargo demand is expected to exceed pre-crisis (2019) levels by 8%. In 2022, cargo demand is projected to surpass pre-crisis (2019) levels by 13%.

Overall revenues in 2021 are estimated to grow by 26.7% compared to 2020 to $472 billion (similar to 2009 levels).

Further growth of 39.3% in 2022 will see industry revenues rise to $658 billion (similar to 2011 levels).

The passenger business will contribute $227 billion to industry revenues in 2021, rising to $378 billion in 2022.

Passenger yields declined each year between 2012 and 2020. In 2021, yields are expected to grow by 2.0% and a further 10% in 2022.

Cargo revenues are expected to rise to a record $175 billion in 2021 with a similar $169 billion expected in 2022.

Cargo yields are expected to grow by 15% in 2021 but decline by 8% in 2022.

Airlines achieved aggressive cost reductions having reduced overall expenses by 34% in 2021 compared to 2019.

Nevertheless, costs will rise in 2022 and will be only 15% lower compared with pre-crisis levels with expanded operations and higher fuel prices.

All regions will improve their collective financial performance compared to 2020, IATA predicted.

The strongest performing region is North America, expected to lose $5.5 billion loss this year but post $9.9 billion profits in 2022.

All other regions will see reduced losses in 2022 compared to 2021.

Asia-Pacific carriers are expected to see losses diminish from $11.2 billion in 2021 to $2.4 billion in 2022.

The region continues to suffer some of the most draconian travel restrictions.

While there has been some alleviation in restrictions, significant improvements in international markets are not expected until later in 2022.

Reduced losses are expected to be achieved on the back of large and largely open domestic markets, not least of which is China.

The region’s carriers are also benefiting disproportionately from the strength of air cargo markets in which they are dominant.

Middle Eastern carriers will see very limited improvement in their financial performance from a $6.8 billion loss in 2021 to a $4.6 billion loss in 2022.

Without large domestic markets, the region’s major carriers rely significantly on connecting traffic, especially to Asia-Pacific which has been slow to re-open to international traffic.


Source: Manila Bulletin (https://mb.com.ph/2021/10/05/airlines-bleeding-201-billion-for-2020-2022/?utm_source=rss&utm_medium=rss&utm_campaign=airlines-bleeding-201-billion-for-2020-2022)