Uneven Vaccine Roll-Out to ‘Restrict Recovery in Europe’, says IATA


IATA has revised its forecast for the recovery of global air traffic and now expects passenger traffic to reach 43% of the 2019 level over the course of this year.

However, IATA predicts domestic demand in the largest markets, the US and China, will drive the recovery and international traffic reach little more than one third (34%) of the 2019 level.

IATA also warned an “uneven vaccination roll-out” will “restrict the recovery within Europe and the North Atlantic” this summer although “vaccination progress in the US and Europe, [will] enable a return of some international travel at scale in the second half of the year”.

The association notes 2020 “started strong and ended weak” while 2021 started weak and should strengthen and concludes “the result will be zero international growth” this year.

It estimates carriers will lose an additional $48 billion worldwide this year as a consequence, on top of more than $126 billion lost last year.

IATA director general Willie Walsh said: “This crisis is longer and deeper than anyone could have expected.

“There is optimism in domestic markets. However, government imposed travel restrictions continue to dampen underlying demand for international travel.”

Walsh urged governments to provide roadmaps for re-opening travel, arguing: “Most governments have not yet provided clear indications of the benchmarks they will use to give people back their travel freedom.”

He also called for sector-specific support. Walsh noted government financial relief and borrowing on capital markets by airlines had prevented “widespread bankruptcies”, but he said: “More government relief measures, particularly employment support programmes, will be needed. “

Walsh argued: “Some airlines appear able to ride out the storm. Others are less well-cushioned and may need to raise more cash from banks or capital markets.

“This will add to the industry’s debt burden, which has ballooned by $220 billion to $651 billion.”

The Iata chief demanded “an end to extortionate costs for Covid-19 testing, with governments taking their cut on top in taxes”, and slammed the cost of PCR tests as “unacceptable”

He also hit out at “monopoly suppliers” – major airports and air navigation service providers (ANSPs) – which he accused of “gouging [airline] customers to recoup losses through higher charges”.

Iata warned airline capacity would return “at a slower pace than demand”, with debt and cost pressures leading carriers to focus on “cash-positive” operations.

It forecast an overall industry load factor of just over 60% for 2021, noting the general break-even level for airlines is 66%.

The association warned airline losses in Europe, where only 11% of traffic is domestic, would exceed $22 billion this year.

By contrast, IATA estimates airline losses in North America – where 66% of the market is domestic – at $5 billion and in Asia-Pacific (45% domestic) at $10.5 billion.

It suggested Middle East carriers will benefit from rapid vaccination rates in their home markets, but “be hampered by continued travel restrictions on many of the routes to emerging economies served through Gulf connections”.

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