In the wake of raging Covid-19 pandemic, The International Air Transport Association (IATA) estimates that industry passenger revenues could plummet $252 billion or 44% below 2019’s figure. This is in a scenario in which severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year. Markets with severe restrictions cover 98% of global passenger revenues.
This estimation is an update on IATA’s previous analysis of up to a $113 billion revenue loss, made on 5 March 2020, before the countries around the world introduced sweeping travel restrictions that largely eliminated the international air travel market. IATA reports that deep economic recession will delay recovery and fiscal stimulus is expected to stop recession exceeding Global Financial Crisis (GFC) in depth and duration. IATA also estimates that airlines will run out of cash before recovery arrives and that a typical airline had 2 months of cash at the start of this year.
“The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates. But without immediate government relief measures, there will not be an industry left standing. Airlines need $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,” urged IATA’s director general and CEO, Alexandre de Juniac.
The latest analysis envisions that under this scenario, severe restrictions on travel are lifted after 3 months. The recovery in travel demand later this year is weakened by the impact of global recession on jobs and confidence. Full year passenger demand (revenue passenger kilometers or RPKs) declines 38% compared to 2019. Industry capacity (available seat kilometer or ASKs) in domestic and international markets declines 65% during the second quarter ended 30 June compared to a year-ago period, but in this scenario recovers to a 10% decline in the fourth quarter.
|Region of Airline Registration||% Change in RPKs (2020 vs. 2019)||Est. Impact on Pass. Revenue 2020 vs. 2019 (US$ billions)|