Airlines in the Middle East will see an improvement in business next year after a difficult period in 2020, but they will continue to burn through cash, with estimated losses in the industry expected to reach $3.3 billion, according to the International Air Transport Association (IATA).
The projected losses in 2021 will be nearly half this year’s revenue drop of $7.1 billion, which is still a “worrisome” picture for a region that is largely dependent on revenues from the tourism and air transport sectors, which both contribute $13 billion to the gross domestic product (GDP) and support 3.4 million jobs, said Muhammad Ali Albakri, IATA regional vice president for Africa and the Middle East.
“The forecast for 2021 is not that much better, but it is better than 2020. However, it's still in the negative territory in terms of passenger traffic and revenues,” Albakri said in a media briefing on Wednesday.
According to Albakri, the current landscape in the Middle East’s air travel industry is worrisome. He noted that prior to the crisis, airlines in the region were witnessing double-digit growth, while aviation hubs served a record number of destinations, with city pairs accounting for 1,060 as of April 2019.
“If you look at [the data in] April 2020, a year later, we’re down to 100 city pairs, unfortunately. And it goes to show the huge impact that COVID-19 and all the related government policies or procedures have done to the sector… This is a really worrisome picture, not only for the aviation sector but for everybody who lives [in the region]… whose livelihood depends on the sector,” Albarki said.
IATA had said that the global airline industry will record a net loss of $118.5 billion for 2020, deeper than what was forecast in June, at $84.3 billion, and another $38.7 billion in 2021, deeper than the earlier projection of $15.8 billion
“[Next year’s] loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed ash at least until the fourth quarter of 2021, there is no time to lose,” said Alexandre de Juniac, IATA’s director general and CEO.
De Juniac said the history books will record 2020 as the “industry’s worst financial year” ever.
“Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack up unprecedented losses. Were it not for the $173 billion in financial support by governments, we would have seen bankruptcies on a massive scale,” said de Juniac.
Across the world, passenger numbers are forecast to fall to 1.8 billion (60.5 percent down on the 4.5 billion passengers in 2019). This is roughly the same number that the industry carried in 2003.
Passenger revenues are expected to plummet to $191 billion, just under a third of the $612 billion earned in 2019, largely due to a 66 percent fall in passenger demand.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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