Airline business will worsen before improving, IATA warns

Middle East travel demand plunged 82.3% in January

  
An airplane take off the airport. Image used for illustrative purpose.

An airplane take off the airport. Image used for illustrative purpose.

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The outlook for airlines around the world is expected to worsen before a recovery takes hold, as governments around the world have tightened health-related restrictions to curb the spread of new COVID-19 variants, the International Air Transport Association (IATA) has warned.

Carriers had a really bad start to the year, with global passenger traffic falling in January compared to the traffic in December 2020 and prior to the pandemic.

Total demand for the month, measured in revenue passenger kilometres (RPK), plunged 72 percent compared to January 2019. That was worse than the 69.7 percent year-over-year decline recorded in December 2020.

“The airlines are facing a really tough start to the year for passenger business, which is where the majority of revenues come from…[The situation] will get worse before it will improve,” Brian Pearce, chief economist of IATA, said in a media briefing.

According to IATA’s latest figures, airlines in the Middle East saw demand plunge even further by 82.3 percent in January compared to January 2019. It’s worse than the 82.6 percent decline in December compared to the same month in 2019. Capacity also sank 67.6 percent, while load factor fell 33.9 percentage points to 40.8 percent.

“2021 is starting off worse than 2020 ended and that is saying a lot. Even as vaccination programmes gather pace, new COVID variants are leading governments to increase travel restrictions,” said Alexandre de Juniac, IATA’s director general and chief executive officer.

“The uncertainty around how long these restrictions will last also has an impact on future travel.”

So far, there aren’t any signs that the business is improving. February bookings made by passengers planning to travel in the coming summer season are still 78 percent below the levels seen in February 2019.

Demand is still there

IATA officials maintained that demand for air travel is still there. However, consumers are unwilling to fly in view of the strict border controls or restrictions still in place in many jurisdictions around the world.

“Consumers have savings to spend. There will be a willingness to fly [once restrictions ease]. The critical thing is to get the restrictions lowered,” said Pearce.

“We are not concerned about [customers’] appetite to fly. It’s still there. We will see people coming back… They will rush to the aircraft [once restrictions are lifted],” de Juniac added.

Airlines who have redeployed their aircraft across their network worldwide, including UAE-based carriers Emirates, Etihad and Flydubai, had to suspend some of their flights recently after border controls tightened following the discovery of new COVID-19 variants.

Among the latest cancellations, Emirates’ flights to South Africa were suspended recently until March 10, 2021, in line with recent government directives that restrict the entry of travellers originating from South Africa, into the UAE.

Recovery

De Juniac said the recovery in the industry will largely depend on the pace of lifting restrictions related to the pandemic and distribution of the COVID-19 vaccines, which can vary from one state to another.

As of last week, more than 3.48 million residents in UAE have been vaccinated. More than half (57.66 percent) of elderly residents have also received the vaccine.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

Cleofe.maceda@refinitiv.com

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© ZAWYA 2021

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