Tag Archives: The International Air Transport Association (IATA)

IATA: Government response to Omicron threatens emerging recovery

The International Air Transport Association (IATA) announced that the recovery in air travel continued in October 2021 with broad-based improvements in both domestic and international markets. It also warned that the imposition of travel bans by governments, against the advice of the WHO, could threaten the sector’s recovery.

Because comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted all comparisons are to October 2019, which followed a normal demand pattern.

  • Total demand for air travel in October 2021 (measured in revenue passenger kilometers or RPKs) was down 49.4% compared to October 2019. This was improved over the 53.3% fall recorded in September 2021, compared to two years earlier.
  • Domestic markets were down 21.6% compared to October 2019, bettering the 24.2% decline recorded in September versus September 2019.
  • International passenger demand in October was 65.5% below October 2019, compared to a 69.0% decline for September versus the 2019 period, with all regions showing improvement.

“October’s traffic performance reinforces that people will travel when they are permitted to. Unfortunately, government responses to the emergence of the Omicron variant are putting at risk the global connectivity it has taken so long to rebuild,” said Willie Walsh, IATA’s Director General.

Air Passenger Market Detail- October 2021

 

OCT 2021
(% VS OCT 2019)
WORLD SHARE1​​ RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100%
-49.4%
-41.2%
-11.5%
70.6%
Africa
1.9%
-60.1%
-50.0%
-14.2%
55.8%
Asia Pacific
38.6%
-66.4%
-56.5%
-18.6%
62.9%
Europe
23.7%
-45.3%
-36.6%
-11.8%
74.9%
Latin America
5.7%
-33.6%
-33.0%
-0.7%
80.9%
Middle East
7.4%
-59.0%
-47.8%
-15.7%
57.7%
North America
22.7%
-26.3%
-19.7%
-6.8%
76.9%

1) % of industry RPKs in 2020    2) Change in load factor vs. the same month in 2019    3) Load Factor Level

Note: the seven domestic passenger markets for which broken-down data are avaiable for approximately 46% of global total RPKs and 84% of domestic RPKs.

Note: The total industry and regional growth rates are based on a constant sample of airlines combining reported data and estimates for missing observations.  Airline traffic is allocated according to the region in which the carrier is registered; it should not be considered as regional traffic.

International Passenger Markets

 

European carriers’ October international traffic declined 50.6% versus October 2019, much improved over the 56.5% drop in September compared to September 2019. Capacity dropped 41.3% and load factor fell 13.7 percentage points to 72.5%.

Asia-Pacific airlines saw their October international traffic fall 92.8% compared to October 2019, fractionally improved over the 93.1% decline recorded for September 2021 compared to two years ago. Capacity dropped 83.8% and the load factor was down 44.0 percentage points to 35.7%, the lowest among regions by far.

Middle Eastern airlines had a 60.3% demand drop in October compared to October 2019, a huge jump over the 67.1% traffic drop recorded in September against September 2019. Capacity declined 49.1%, and load factor slipped 16.1 percentage points to 57.5%.

North American carriers experienced a 57.0% traffic drop in October versus the 2019 period, improved from a 61.4% decline in September 2021 compared to the same month in 2019. Capacity dropped 43.2%, and load factor fell 20.0 percentage points to 62.4%.

Latin American airlines saw a 55.1% drop in October traffic, compared to the same month in 2019. In September, traffic was down 61.4% compared to two years ago. October capacity fell 52.5% and load factor dropped 4.3 percentage points to 76.9%, which was the highest load factor among the regions for the 13th consecutive month.

African airlines’ traffic fell 60.2% in October versus two years’ ago. Traffic in September was down 62.1% over the corresponding 2019 period. October capacity was down 49.0% and load factor declined 15.2 percentage points to 54.1%.

Domestic Passenger Markets

 

OCT 2021
(%VS OCT 2019)
WORLD SHARE1​​ RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
54.2%
-21.6%
-14.6%
-6.9%
76.7%
Dom. Australia
0.7%
-81.0%
-70.6%
-29.6%
54.1%
Dom. Brazil
1.6%
-16.3%
-16.6%
0.3%
84.3%
Dom. China P.R.
19.9%
-25.7%
-9.7%
-15.1%
70.3%
Dom India
2.1%
27.0%
-21.0%
-6.4%
77.3%
Dom. Japan
1.4%
-49.3%
-29.3%
-21.9%
55.7%
Dom. Russian Fed.
3.4%
24.0%
23.7%
0.2%
84.9%
Dom. US
16.6%
-10.5%
7.3%
-2.9%
81.8%

1) % of industry RPKs in 2020    2) Change in load factor vs. the same month in 2019    3) Load Factor Level

Note: the seven domestic passenger markets for which broken-down data are avaiable for approximately 46% of global total RPKs and 84% of domestic RPKs.

Note: The total industry and regional growth rates are based on a constant sample of airlines combining reported data and estimates for missing observations.  Airline traffic is allocated according to the region in which the carrier is registrated; it should not be considered as regional traffic.

India’s domestic market saw a 27.0% decline in October demand compared to October 2019 – greatly improved from a 40.5% fall in September following the easing of some control measures.

Russia’s October domestic traffic was up 24% compared to October 2019, which was deceleration from the 29.3% growth recorded in September 2021 over the two-year ago period, attributable to a strong wave of COVID-19 and the start of the winter travel season.

The Bottom Line

“The lifting of the US restrictions on travel from some 33 countries last month raised hopes that a surge in pent-up travel demand would buoy traffic over the coming Northern Hemisphere winter. But the emergence of the Omicron variant panicked many governments into once again restricting or entirely removing the freedom to travel—even though WHO clearly advised that ‘blanket travel bans will not prevent the international spread, and they place a heavy burden on lives and livelihoods.’ The logic of the WHO advice was evident within days of Omicron’s identification in South Africa, with its presence already confirmed in all continents. The ill-advised travel bans are as ineffective as closing the barn door after the horse has bolted,” said Walsh.

Last month, IATA released a Blueprint (pdf) to help guide governments in safely re-opening their borders with data-driven decision-making. Specifically, IATA urged governments to focus on three key areas:

  • Simplified health protocols
  • Digital solutions to process health credentials
  • COVID-19 measures proportionate to risk levels with a continuous review process

“Additionally, governments must address the terrible disparity in vaccination rates that has seen the developed world offering boosters at a time when less than 10% of the African continent is fully vaccinated,” said Walsh.

IATA: Air cargo up 7.7% in August versus pre-COVID levels; capacity lagging demand

IATA issued this report:

The International Air Transport Association (IATA) released August 2021 data for global air cargo markets showing that demand continued its strong growth trend but pressure on capacity is rising.

As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted, all comparisons below are to August 2019 which followed a normal demand pattern.

  • Global demand, measured in cargo tonne-kilometers (CTKs*), was up 7.7% compared to August 2019 (8.6% for international operations). Overall growth remains strong compared to the long-term average growth trend of around 4.7%.
  • The pace of growth slowed slightly compared to July, which saw demand increase 8.8% (against pre-COVID-19 levels).
  • Cargo capacity recovery paused in August, down 12.2% compared to August 2019 (‑13.2% for international operations). In month-on-month terms, capacity fell by 1.6% – the largest drop since January 2021.

Economic conditions continue to support air cargo growth but are slightly weaker than in the previous months indicating that global manufacturing growth has peaked:

  • The August manufacturing output component of the Purchasing Managers Indices (PMIs) was 51.9, indicating a short-term boost to demand if those orders are shipped by air. This was a decline from 54.4 in July.
  • The August new export orders component of the PMIs was favorable for air cargo, despite being less supportive than in the previous months. Expansion continued at the global level, however, there was contraction in emerging economies.
  • The inventory-to-sales ratio remains low ahead of the peak year-end retail season. This is positive for air cargo, however further capacity constraints put this at risk.

“Air cargo demand had another strong month in August, up 7.7% compared to pre-COVID levels. Many of the economic indicators point to a strong year-end peak season. With international travel still severely depressed, there are fewer passenger planes offering belly capacity for cargo. And supply chain bottlenecks could intensify as businesses continue to ramp up production,” said Willie Walsh, IATA’s Director General.

AUGUST 2021
% VS AUGUST 2019
WORLDSHARE1 CTK ACTK CLF(%-PT)​2 CLF(LEVEL)​3
Total Market
100%
7.7%
-12.2%
10.0%
54.2%
Africa
2.0%
32.4%
-3.8%
11.8%
43.0%
Asia Pacific
32.6%
-2.1%
-28.1%
18.5%
69.8%
Europe
22.3%
6.3%
-12.1%
9.9%
57.5%
Latin America
2.4%
-13.2%
-20.0%
3.2%
40.4%
Middle East
13.0%
15.5%
-5.2%
9.4%
52.9%
North America
27.8%
19.3%
0.7%
6.8%
43.7%

(1) % of industry CTKs in 2020   (2) Change in load factor vs same month in 2019    (3) Load factor level

August Regional Performance 

 

Asia-Pacific airlines saw their international air cargo volumes increase 3.0% in August 2021 compared to the same month in 2019.This was a slowdown in demand compared to the previous month’s 4.4% expansion. Demand is being affected by an easing in growth momentum in key activity indicators in Asia, and by congested supply chains especially on Within Asia and Europe-Asia routes. International capacity is significantly constrained in the region, down 21.7% vs. August 2019.

North American carriers posted an 18% increase in international cargo volumes in August 2021 compared to August 2019. New export orders and demand for faster shipping times are underpinning the North American performance. The downside risk from capacity constraints is high; international cargo capacity remains restricted and many of the key air cargo hubs are reporting severe congestion, including Los Angeles and Chicago. International capacity decreased 6.6%.

European carriers saw a 6% increase in international cargo volumes in August 2021 compared to the same month in 2019. This was on a par with July’s performance. Manufacturing activity, orders and long supplier delivery times remain favorable to air cargo demand. International capacity decreased 13.6%.

Middle Eastern carriers experienced an 15.4% rise in international cargo volumes in August 2021 versus August 2019, an improvement compared to the previous month (13.4%). The large Middle East–Asia trade lanes continue to post strong performance. International capacity decreased 5.1%.

Latin American carriers reported a decline of 14% in international cargo volumes in August compared to the 2019 period, which was the weakest performance of all regions. Capacity remains significantly constrained in the region, with international capacity decreasing 27.1% in August, the largest fall of any region.

African airlines’ saw international cargo volumes increase by 33.9% in August, the largest increase of all regions. Investment flows along the Africa-Asia route continue to drive the regional outcomes with volumes on the route up 26.4% over two years ago. International capacity decreased 2.1%.

IATA: From Bad to Worse: January Passenger Demand Falls Further

The International Air Transport Association (IATA) announced that passenger traffic fell in January 2021, both compared to pre-COVID levels (January 2019) and compared to the immediate month prior (December 2020).

Because comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted all comparisons are to January 2019 which followed a normal demand pattern.

  • Total demand in January 2021 (measured in revenue passenger kilometers or RPKs) was down 72.0% compared to January 2019. That was worse than the 69.7% year-over-year decline recorded in December 2020.
  • Total domestic demand was down 47.4% versus pre-crisis (January 2019) levels. In December it was down 42.9% on the previous year. This weakening is largely driven by stricter domestic travel controls in China over the Lunar New Year holiday period.
  • International passenger demand in January was 85.6% below January 2019, a further drop compared to the 85.3% year-to-year decline recorded in December.

“2021 is starting off worse than 2020 ended and that is saying a lot. Even as vaccination programs gather pace, new COVID variants are leading governments to increase travel restrictions. The uncertainty around how long these restrictions will last also has an impact on future travel. Forward bookings in February this year for the Northern Hemisphere summer travel season were 78% below levels in February 2019,” said Alexandre de Juniac, IATA’s Director General and CEO.

JANUARY 2021 (%CHG. VS 2019) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100.0%
-72.0%
-58.7%
-25.7%
54.1%
Africa
1.9%
-63.9%
-53.0%
-16.4%
54.4%
Asia Pacific
38.6%
-71.5%
-59.0%
-24.8%
56.6%
Europe
23.7%
-77.4%
-68.7%
-22.4%
57.6%
Latin America
5.7%
-58.0%
-49.5%
-13.9%
68.5%
Middle East
7.4%
-80.7%
-65.8%
-32.4%
42.2%
North America
22.7%
-67.5%
-46.5%
-31.2%
48.4%

1) % of industry RPKs in 2020    2) Change in load factor vs. the same month in 2019    3) Load Factor Level

International Passenger Markets

Asia-Pacific airlines’ January traffic plummeted 94.6% compared to the 2019 period, virtually unchanged from the 94.4% decline registered for December 2020 compared to a year ago. The region continued to suffer from the steepest traffic declines for a seventh consecutive month. Capacity dropped 86.5% and load factor sank 49.4 percentage points to 32.6%, by far the lowest among regions.

European carriers had an 83.2% decline in traffic in January versus January 2019, worsened from an 82.6% decline in December compared to the same month in 2019. Capacity sank 73.6% and load factor fell by 29.2 percentage points to 51.4%.

Middle Eastern airlines saw demand plunge 82.3% in January compared to January 2019, which was broadly unchanged from an 82.6% demand drop in December versus a year ago. Capacity fell 67.6%, and load factor declined 33.9 percentage points to 40.8%.

North American carriers’ January traffic fell 79.0% compared to the 2019 period, up slightly from a 79.5% decline in December year to year. Capacity sagged 60.5%, and load factor dropped 37.8 percentage points to 42.9%.

Latin American airlines experienced a 78.5% demand drop in January, compared to the same month in 2019, worsened from a 76.2% decline in December year-to-year. January capacity was 67.9% down compared to January 2019 and load factor dropped 27.2 percentage points to 55.3%, highest among the regions for a fourth consecutive month.

African airlines’ traffic dropped 66.1% in January, which was a modest improvement compared to a 68.8% decline recorded in December versus a year ago. January capacity contracted 54.2% versus January 2019, and load factor fell 18.4 percentage points to 52.3%.

Domestic Passenger Markets

JANUARY 2021 (%CHG. VS 2019) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
54.3%
-47.4%
-30.5%
-19.3%
60.1%
Dom. Australia
0.7%
-81.6%
-77.8%
-13.3%
64.8%
Dom. Brazil
1.6%
-31.4%
-29.4%
-2.4%
81.6%
Dom. China P.R.
19.9%
-33.9%
-15.1%
-18.2%
64.0%
Dom India
2.1%
-37.6%
-22.5%
-16.8%
69.3%
Dom. Japan
1.5%
-71.3%
-39.9%
-35.0%
31.9%
Dom. Russian Fed.
3.4%
5.5%
-0.7%
4.7%
80.1%
Dom. US
16.6%
-60.3%
-37.8%
-28.7%
50.5%

1) % of industry RPKs in 2020    2) Change in load factor vs. the same month in 2019    3) Load Factor Level

China’s domestic traffic was down 33.9% in January compared to January 2019, dramatically worsened compared to the 8.5% year-over-year decline in December. The fall was owing to stricter traffic controls ahead of the Lunar New Year holiday period amid several localized COVID-19 outbreaks.

Russia’s domestic traffic, by contrast, rose 5.5% compared to January 2019, a turnaround from the 12.0% year-to-year decline in December versus the same month in 2019. It was driven by a fall in COVID-19 cases since a peak late in December and by national holidays in the first week of the month.

The Bottom Line

“To say that 2021 has not gotten off to a good start is an understatement. Financial prospects for the year are worsening as governments tighten travel restrictions. We now expect the industry to burn through $75-$95 billion in cash this year, rather than turning cash positive in the fourth quarter, as previously thought. This is not something that the industry will be able to endure without additional relief measures from governments.

Increased testing capability and vaccine distribution are the keys for governments to unlock economic activity, including travel. It is critical that governments build and share their restart plans along with the benchmarks that will guide them. This will enable the industry to be prepared to energize the recovery without any unnecessary delay,” said de Juniac.

Global standards to securely record test and vaccination data in formats that will be internationally recognized are urgently needed. “These will be critical to restarting international travel if governments continue to require verified testing or vaccination data. IATA will soon launch the IATA Travel Pass to help travelers and governments manage digital health credentials. But the full benefit of IATA Travel Pass cannot be realized until governments agree the standards for the information they want,” said de Juniac.

IATA: Airlines to remain cash negative through 2021

IATA issued this report:

The International Air Transport Association (IATA) released new analysis showing that the airline industry is expected to remain cash negative throughout 2021. Previous analysis (November 2020) indicated that airlines would turn cash positive in the fourth quarter of 2021. At the industry level, airlines are now not expected to be cash positive until 2022.

Estimates for cash burn in 2021 have ballooned to the $75 billion to $95 billion range from a previously anticipated $48 billion. The following factors play into this estimate:

  • Weak Start for 2021: It is already clear that the first half of 2021 will be worse than earlier anticipated. This is because governments have tightened travel restrictions in response to new COVID-19 variants. Forward bookings for summer (July-August) are currently 78% below levels in February 2019 (comparisons to 2020 are distorted owing to COVID-19 impacts).
  • Optimistic Scenario: From this lower starting point for the year, an optimistic scenario would see travel restrictions gradually lifted once the vulnerable populations in developed economies have been vaccinated, but only in time to facilitate tepid demand over the peak summer travel season in the northern hemisphere. In this case 2021 demand would be 38% of 2019 levels. Airlines would burn through $75 billion of cash over the year. But cash burn of $7 billion in the fourth quarter would be significantly improved from an anticipated $33 billion cash burn in the first quarter.
  • Pessimistic Scenario: This scenario would see airlines burn through $95 billion over the year. There would be an improving trend from a $33 billion cash burn in the first quarter reducing to $16 billion in the fourth quarter. The driver of this scenario would be governments retaining significant travel restrictions through the peak northern summer travel season. In this case, 2021 demand would only be 33% of 2019 levels.

“With governments having tightening border restrictions, 2021 is shaping up to be a much tougher year than previously expected. Our best-case scenario sees airlines burning through $75 billion in cash this year. And it could be as bad as $95 billion. More emergency relief from governments will be needed. A functioning airline industry can eventually energize the economic recovery from COVID-19. But that won’t happen if there are massive failures before the crisis ends. If governments are unable to open their borders, we will need them to open their wallets with financial relief to keep airlines viable,” said Alexandre de Juniac, IATA’s Director General and CEO.

With airlines now expected to burn cash throughout 2021 it is vital that governments and the industry are fully prepared to restart the moment governments agree that it is safe to re-open borders. That makes three initiatives critical:

Planning

Preparing the industry to safely restart after a year or more of disruption will take careful planning and months of preparation. Governments can ensure that airlines are prepared to reconnect people and economies by working with industry to develop the benchmarks and plans that would enable an orderly and timely restart.

“The UK has set a good example. Earlier this week it laid out a structure for re-opening based on an improvement in the COVID-19 situation. This gives airlines a framework to plan the restart, even if it needs to be adjusted along the way. Other governments should take note as a best practice for working with industry,” said de Juniac.

Health Credentials

It is becoming clear that vaccines and testing will play a role as the pandemic comes under control and economies ramp up, including the travel sector. The IATA Travel Pass will enable travelers to securely control their health data and share it with relevant authorities. A growing list of airlines—including Air New Zealand, Copa Airlines, Etihad Airways, Emirates, Qatar Airways, Malaysia Airlines, RwandAir, and Singapore Airlines—have done or are committed to doing trials with IATA Travel Pass.

Efficient digital management of health credentials is vital to restart. Manual processes will not be able to cope with volumes once the recovery begins. Digital solutions must be secure, work with existing systems, align with global standards and respect data privacy. In developing the IATA Travel Pass these are fully in focus. The IATA Travel App will help to set the bar very high for managing health credentials, protecting against fraud and enabling a convenient travel process. While there is choice in the market for solutions, there should be no compromise on the fundamentals, or we risk failing systems, disappointed governments and travelers, and a delayed restart,” said de Juniac.

Global Standards: As vaccination programs and testing capacity expand, two developments have become critical—global standards to record tests and vaccines; and a plan to retrospectively record those who have already been vaccinated.

“Speed is critical. Fraudulent COVID-19 test results are already proving to be an issue. And as vaccine programs ramp up governments are using paper processes and differing digital standards to record who has been vaccinated. These are not the conditions needed to support a successful restart at scale when governments open borders. The WHO, ICAO, and OECD are working on standards, but each day without them means the challenge gets bigger. We need an early conclusion by competent authorities that the industry can plan around,” said de Juniac.

“Even as governments focus on managing the COVID-19 crisis, we must be thinking a step ahead to the plans, tools and standards needed to restart flying and energize the economic recovery from COVID-19. Working in partnership is nothing new for airlines or for governments. It’s how we have delivered safe, efficient, and reliable connectivity for decades. For a year it’s been lockdowns and restrictions as vaccines were developed and testing capacity expanded. The reason for all the pain that this has caused is to keep people safe and to eventually be able to retore their well-being and that of the economy. With good news on vaccines and growing testing capacity, there is a glimmer of light at the end of the tunnel. So, it’s the time to ask governments for their restart plan and to offer any support from industry that could help,” said de Juniac.

IATA: COVID-19 shakes up the rankings of the world airports for connections (China now has the top four cities)

The International Air Transport Association (IATA) released data revealing that the COVID-19 crisis has had a devastating impact on international connectivity, shaking up the rankings of the world’s most connected cities.

  • London, the world’s number one most connected city in September 2019, has seen a 67% decline in connectivity. By September 2020, it had fallen to number eight.
  • Shanghai is now the top ranked city for connectivity with the top four most connected cities all in China—Shanghai, Beijing, Guangzhou and Chengdu.
  • New York (-66% fall in connectivity), Tokyo (-65%), Bangkok (-81%), Hong Kong (-81%) and Seoul (-69%) have all exited the top ten.
  • The study reveals that cities with large numbers of domestic connections now dominate, showing the extent to which international connectivity has been shut down.
RANKING SEPTEMBER 2019 SEPTEMBER 2020
1
London
Shanghai
2
Shanghai
Beijing
3
New York
Guangzhou
4
Beijing
Chengdu
5
Tokyo
Chicago
6
Los Angeles
Shenzhen 
7
Bangkok
Los Angeles
8
Hong Kong
London
9
Seoul
Dallas
10
Chicago
Atlanta

“The dramatic shift in the connectivity rankings demonstrates the scale at which the world’s connectivity has been re-ordered over the last months. But the important point is that rankings did not shift because of any improvement in connectivity. That declined overall in all markets. The rankings shifted because the scale of the decline was greater for some cities than others. There are no winners, just some players that suffered fewer injuries. In a short period of time we have undone a century of progress in bringing people together and connecting markets. The message we must take from this study is the urgent need to re-build the global air transport network,” said Sebastian Mikosz, IATA’s Senior Vice President for Member External Relations.

IATA’s 76th Annual General Meeting called on governments to safely re-open borders using testing. “The systematic testing of travelers is the immediate solution to rebuilding the connectivity that we have lost. The technology exists. The guidelines for implementation have been developed. Now we need to implement, before the damage to the global air transport network becomes irreparable,” said Mikosz.

Air transport is a major engine of the global economy. In normal times some 88 million jobs and $3.5 trillion in GDP is supported by aviation. More than half of this employment and economic value is at risk from the collapse in global air travel demand. “Governments must realize that there are major consequences for peoples’ lives and livelihoods. At least 46 million jobs supported by air transport are in peril. And the strength of the economic recovery from COVID-19 will be severely compromised without the support of a functioning air transport network,” said Mikosz.

IATA’s air connectivity index measures how well connected a country’s cities are to other cities around the world, which is critical for trade, tourism, investment and other economic flows. It is a composite measure reflecting the number of seats flown to the destinations served from a country’s major airports and the economic importance of those destinations.

COVID-19 impacts on connectivity by region (April 2019-April 2020, IATA Connectivity Index measure)

Africa suffered a 93% decline in connectivity. Ethiopia managed to buck the trend. During the first peak of the pandemic in April 2020, Ethiopia maintained connections with 88 international destinations. Many aviation markets reliant on tourism, such as Egypt, South Africa and Morocco, were particularly severely impacted.

Asia-Pacific saw a 76% decline in connectivity. Stronger domestic aviation markets, such as China, Japan and South Korea performed better among the most connected countries in the region. Despite the relatively large domestic aviation market, Thailand was severely impacted perhaps because of the country’s high reliance on international tourism.

Europe experienced a 93% fall in connectivity. European countries saw significant declines across most markets, although Russian connectivity has held up better than Western European countries.

Middle East countries saw connectivity decline by 88%. With the exception of Qatar, connectivity levels reduced by more than 85% for the five most connected countries in the region. Despite border closures, Qatar allowed passengers to transit between flights. It was also an important hub for air cargo.

North American connectivity declined 73%. Canada’s connectivity (-85% decline) was hit more heavily than the United States (-72%). In part, this reflects the large domestic aviation market in the United States, which despite a significant passenger decline, has continued to support connectivity.

Latin America suffered a 91% collapse in connectivity. Mexico and Chile performed relatively better than the other most connected countries, perhaps due to the timing of domestic lockdowns in these countries and how strictly they were enforced.

Before the pandemic

Prior to the COVID-19 pandemic, the growth in air connectivity was a global success story. Over the last two decades the number of cities directly linked by air (city-pair connections) more than doubled while over the same period, air travel costs fell by around half.

The top-ten most connected countries in the world mostly saw significant increases over the 2014-2019 period. The United States remained the most connected country, with growth of 26%. China, in second place, grew connectivity by 62%. Other standout performers in the top ten included fourth-place India (+89%) and ninth-place Thailand (+62%).

IATA’s research explored the benefits of increased air connectivity. The standout conclusions were:

  • A positive link between connectivity and productivity. A 10% rise in connectivity, relative to a country’s GDP, will boost labour productivity levels by 0.07%.
  • The impact is greater for developing countries. Investments in air transport capacity in countries where connectivity is currently relatively low will have a much larger impact on their productivity and economic success than a similar level of investment in a relatively developed country.
  • Tourism revenue may be reinvested to form capital assets. Air transport has contributed to greater employment opportunities and wider economic benefits through the tourism catalytic effects, particularly in small island states. In emerging market economies, there may be a structural shortage of demand, so tourism spend can fill in the gap.
  • Tax revenues increase from enhanced economic activity. Air connectivity facilitates economic activity and growth in a given country, which may have a positive impact on government tax revenues.

View the connectivity presentation (pdf).

Meanwhile air cargo is recovering faster than passenger travel:

IATA: European airlines revenue losses mount – urgent government support required

The International Air Transport Association (IATA) strengthened its call for urgent action from European governments to provide financial relief to airlines. The latest IATA scenario for potential revenue loss by European carriers is US$76 bn and passenger demand (measured in Revenue Passenger Kilometers) is projected to be 46% below 2019 levels. A decline of this magnitude puts at risk about 5.6 million jobs and $378bn in GDP supported by air transport.

Some of the impacts at national level include:

United Kingdom
113.5mn fewer passengers resulting in a $21.7bn revenue loss, risking almost 402,000 jobs and around $32.7bn in contribution to the UK economy.

Spain
93.7mn fewer passengers resulting in a $13bn revenue loss, risking 750,000 jobs and $49.4bn in contribution to Spain’s economy.

Germany
84.4mn fewer passengers resulting in a $15bn revenue loss, risking 400,000 jobs and $28bn in contribution to Germany’s economy.

Italy
7mn fewer passengers resulting in a $9.5bn revenue loss, risking 256,000 jobs and $67.4bn in contribution to Italy’s economy.

 

France
65mn fewer passengers resulting in a $12bn revenue loss, risking 318,000 jobs and $28.5bn in contribution to France’s economy.

To minimize the sweeping damage across the European economy that these losses would have, it is vital that governments step up their efforts to aid the industry. Some European governments have already acted, including Norway, Sweden, Finland, Spain, and Italy. But more help is needed. IATA is calling for a combination of:

  • Direct financial support,
  • Loans, loan guarantees and support for the corporate bond market
  • Tax relief

“The air transport industry is an economic engine, supporting up to 12.2 million jobs across Europe and $823 billion in GDP. Every job created in the aviation industry supports another 24 jobs in the wider economy. Governments must recognize the vital importance of the air transport industry, and that support is urgently needed. First, this will keep airlines financially viable during the present lockdown, preserving jobs, maintaining essential connections to repatriate citizens, and carrying life-saving air cargo supplies. Secondly, this would avoid broad economic damage by ensuring that airlines can rapidly scale-up operations when travel restrictions are lifted, jump-starting the European and global economies,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe.

In addition to financial support, IATA called for regulators to provide relief measures. Key priorities in Europe include:

  • An urgent temporary amendment to the EU261 passenger rights regulation. Short-term flexibility is needed immediately. Permitting the use of vouchers instead of refunds, as has been allowed for some tour operators, would give airlines breathing space to repair cash flows.
  • Providing a package of measures to ensure air cargo operations, including fast track procedures to obtain overflight and landing permits, exempting flight crew members from 14-day quarantine, and removing economic impediments (overflight charges, parking fees, and slot restrictions).

“Some regulators are taking positive action. We are grateful to the European Council for insisting on a full-season waiver to the slot use rule. This will enable airlines and airports greater flexibility for this season and greater certainty for next summer. But there is more to do on the regulatory front. Amendments are urgently needed to give more flexibility for EU 261. And they must take measures to keep air cargo moving,” said Schvartzman.

NATION REVENUE IMPACT (US$, BILLIONS) PASSENGER DEMAND IMPACT (ORIGIN-DESTINATION VOLUMES, MILLIONS) POTENTIAL JOBS IMPACT POTENTIAL GDP IMPACT (US$, BILLIONS)
France
-12
-65
-318,000
-28.5
Germany
-15
-84.4
-400,000
-28
Greece
-3.2
-21.5
-193,000
-8.3
Ireland
-2
-15.2
-62,000
-8.9
Italy
-9.5
-67.7
-256,000
-17.4
Netherlands
-4.4
-23.4
-128,400
-10.5
Norway
-2.8
-20
-81,000
-8.7
Portugal
-3
-21.3
-141,000
-6
Russia
-7.1
-51.7
-330,000
-7.7
Spain
-13
-93.7
-750,000
-49.4
Sweden
-2.3
-17
-86,000
-8
Turkey
-5.5
-44.7
-427,000
-19
United Kingdom
-21.7
-113.5
-402,000
-32.7

 

IATA makes a statement about Malaysia Airlines flight MH 17

IATA logo

The International Air Transport Association (IATA), representing the international airlines, has made the following statement of the shoot-down of Malaysia Airlines:

Statement of IATA’s Director General and CEO Tony Tyler:

“The tragedy of MH 17 is an outrage. Over the weekend it was confirmed that the passengers and crew aboard the aircraft were the victims of a hideous crime. It was also an attack against the air transport system which is an instrument of peace.

Among the immediate priorities, the bodies of the victims must be returned to their grieving loved ones in a respectful manner. For over four days we witnessed appalling sights from the crash scene. Governments must set aside their differences and treat the victims and their families with the dignity they deserve – and this includes urgently securing the site.

The investigation must also start quickly and with total freedom and access. Actions over the weekend which slowed down progress on both of these priorities were an outrage to human decency.

We have heard news of potential progress on both these issues. But promises now need to be turned into reality with actions.

Airlines and governments are partners in supporting global connectivity. Airlines carry the passengers and cargo. Governments and air navigation service providers inform airlines about the routes that they can fly and with what restrictions. Airlines comply with that guidance.

That was the case with MH 17. Malaysia Airlines was a clearly identified commercial jet. And it was shot down—in complete violation of international laws, standards and conventions—while broadcasting its identity and presence on an open and busy air corridor at an altitude that was deemed to be safe.

No effort should be spared in ensuing that this outrage is not repeated. Of course, nobody should be shooting missiles at civilian aircraft—governments or separatists. Governments will need to take the lead in reviewing how airspace risk assessments are made. And the industry will do all that it can to support governments, through ICAO, in the difficult work that lies ahead.

This was a terrible crime. But flying remains safe. And everyone involved in global air transport is fully dedicated to making it even safer.”