The industry is experiencing a severe double recession that is cutting passenger and freight traffic. What were the results of 2020 for the aviation industry?
According to the International Civil Aviation Organization (ICAO), the cost of the coronavirus pandemic to the aviation industry last year amounted to $ 391 billion in lower revenues as 60% fewer passengers took to the skies.
Financial difficulties will continue into 2021 as airlines grapple with a double recession. Experts maintain their forecast for a prolonged drop in passenger demand. It will likely lead to a decrease in the number of airlines for several years.
According to ICAO estimates, the reduction in gross income of the aviation sector in the first half of the year will be from 163 to 194 billion dollars. But there is optimism in many quarters that business will start to improve as new COVID vaccines become available to more people.
The International Air Transport Association (IATA) estimates that the aviation sector’s revenue deficit was about $ 510 billion. At the time, the trade group said the airlines would lose a total of $ 118 billion in net profit. Last year, IATA twice revised its estimates downward as the crisis escalated.
A lack of liquidity has forced several carriers to go bankrupt and others to receive government aid or bankruptcy protection.
Overall, aviation operators received $ 500 billion less in revenue in 2020, according to ICAO. Airports lost $ 115 billion in expected revenues and air navigation service providers lost $ 13 billion in revenue.
Airlines carried 1.8 billion passengers in 2020, up from 4.5 billion a year earlier, according to an ICAO report.
Possible scenarios for the development of events
The UN said passenger traffic could begin to improve after a dismal first quarter, depending on the effectiveness of COVID vaccination programs and new approaches to managing the pandemic. Aircraft occupancy is expected to be 40-47% below the 2019 baseline, after a 50% cut last year.
In the most optimistic scenario, passenger traffic is expected to recover to 71% of the 2019 level. A gloomier scenario suggests a recovery in the passenger business of only 49%. International traffic, which determines the number of operating wide-body aircraft that shippers need, are projected at 53% of the pre-crisis level. This is a forecast at best, and only 26% at worst.
Although the global fleet of all-cargo aircraft grew 22.4% to 673 units in 2020, according to ICAO, manufacturers, retailers and agricultural producers rely heavily on passenger flights to transport their goods. More than 50% of air traffic is transported by passenger aircraft. When passenger networks operate several times less than usual, there is a reduction in the available volumes for transportation, especially on transcontinental routes, where larger aircraft are required. This is why the downturn in international traffic is of particular concern to shippers.
The pandemic began to affect air travel in late January 2020 when an outbreak was discovered in Wuhan, China. Initially, the flight cancellations were limited to a few countries, but by the end of March, the air transport system had effectively stopped. At that time, the number of international passengers dropped 98% compared to the 2019 level, and the number of domestic passengers fell by 87%.
Passenger traffic recovered slightly during the summer, but the upward trend was short-lived and began to decline again in September, when a second wave of diseases hit Europe. Then the governments reintroduced restrictive measures. According to the latest data from IATA, international passenger traffic in November was down 88.3% from the previous year.
Recently, governments have responded to new, more prevalent strains of COVID by further restricting borders. Air Canada and WestJet this month began cutting flights and laying off workers after the Canadian government introduced pre-departure testing requirements in addition to local restrictions and quarantine measures.
New data from aviation analyst firm Cirium shows that average weekly flights are down less than a quarter from 2019 on Christmas Eve. But after the peak of the holidays, that figure dropped to 35% of the deficit. Cirium said about 30% of the world’s passenger fleet remains unused.
Aviation industry executives expressed disappointment at the strict travel restrictions and quarantine requirements, saying that a robust pre-departure testing regime can keep flights safe and help air carriers stay financially afloat.
On January 17, IATA appealed to the members of the European Union to agree on a single European digital certificate for COVID-19 vaccination. It would allow vaccinated individuals to travel freely across Europe without being tested for COVID-19. IATA has also developed a trial application that allows passengers to create a “digital passport”. It allows you to make sure that their pre-travel test or vaccination meets the requirements of the destination. Travelers can provide authorities and airlines with test and vaccination certificates to facilitate travel.
The ICAO report highlights that the restrictions on the pandemic have had a disproportionate impact on the international operations of carriers. In general, the volume of domestic passenger traffic decreased by 50%, and international – by 74%.
International flights continued to decline by about three quarters from the same period last year, compared with 35% of domestic flights, according to Cirium.
The Asia Pacific and North America regions have emerged as leaders in the global recovery in total passenger numbers due to their sizeable domestic markets. At this time, a sharp drop has been observed in Europe since September. Traffic in Latin America and the Caribbean improved in the fourth quarter, while recovery in Africa and the Middle East was less robust.
Based on materials from ICAO