Even though figures are set to be better than last year’s final results, significant losses are still expected across the aviation market. The International Air Transport Association (IATA) shared this week that it expects a net loss of $47.7 billion across the airline industry this year.
The trade association of the world’s carriers notes that the year did not get off to a strong start, especially in the international field. A decrease of 86.6% of international passenger traffic remained in January and February 2021. However, there is hope amid progress in vaccination rollouts, which will be scaled up as the year continues. Moreover, the increase in testing capacity will also contribute to the reopening of travel.
A mixed feeling
Better results will be supported by domestic services, which are expected to return quicker than long-haul operations. IATA emphasizes that pent-up demand and the relaxation of national restrictions will undoubtedly help this sector compared with international markets. Overall, numbers in this field are noticeably optimistic. The group estimates that the domestic realm could recover to 96% of 2019’s levels in the second half of this year, which is a 48% increase from 2020.
“This crisis is longer and deeper than anyone could have expected. Losses will be reduced from 2020, but the pain of the crisis increases. There is optimism in domestic markets where aviation’s hallmark resilience is demonstrated by rebounds in markets without internal travel restrictions,” IATA director general Willie Walsh shared in a statement.
“Government imposed travel restrictions, however, continue to dampen the strong underlying demand for international travel. Despite an estimated 2.4 billion people travelling by air in 2021, airlines will burn through a further $81 billion of cash.”
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Cargo remains supreme
IATA also adds that cargo activity has been greater than passenger services throughout the pandemic. This factor is not a surprise amid the ongoing travel restrictions that have forced several flight suspensions across the globe. Altogether, cargo demand is expected to grow by 13.1% over last year, which is a big difference from the decline of 9.1% before the global health crisis.
Shipping specialists have ramped up their cargo operations. Traditional players have been adding new aircraft, such as DHL with its Boeing 767 converted freighters. Meanwhile, other powerhouses have been scaling up their operations. For instance, Amazon Air is currently flying one in three 737 cargo conversions. Additionally, airlines across the board have had to adapt their offerings amid the cargo boom. Several carriers have reconfigured their cabins to allow for more goods to be packed in while passengers have been unable to fill them up.
There is light at the end of the tunnel
Nonetheless, despite the considerable loss figure of $47.7 billion, this is a significant improvement compared with 2020. IATA estimates a net industry loss of $126.4 billion for last year. So, 2021’s losses could be 62.2% lower than 2020. Therefore, while the numbers make for dire reading, it’s still a vast improvement compared to the initial devastation caused by the pandemic on the market.
Airlines and analysts alike all predict that it could take three to five years for the industry to truly recover from the global health crisis. So, any step in this direction will be valued.
Numerous carriers have high hopes for the summer, launching and returning new routes on their network. Some airlines have even resumed the hiring of pilots in anticipation of a busy period.
There is undoubtedly demand to hit the skies, but the increase in numbers all depends on government conditions. After all, several authorities are still unclear what the requirements will in the next few months. Ongoing travel bans, along with strict quarantine requirements, have made it practically impossible for many travelers to fly. However, if the vaccination rollout is a success and there is universal coordination with factors such as testing, figures will improve in the latter half of 2021.
What are your thoughts about the losses throughout the aviation industry? Do you feel that the situation will improve later this year? Let us know what you think of the situation in the comment section.
