Global airlines are expected to lose US$84.3 billion in 2020
for a net profit margin of -20.1 per cent, with revenues falling 50 per cent to
$419 billion, according to the International Air Transport Association (IATA).
Director general and CEO Alexandre de Juniac said: “Financially,
2020 will go down as the worst year in the history of aviation.”
According to IATA’s latest analysis, each day of the year will
add $230 million to industry losses, meaning that – based on an estimate of 2.2
billion passengers by the end of the year – airlines will lose $37.54 per
passenger.
De Juniac added: “Provided there is not a second and more
damaging wave of Covid-19, the worst of the collapse in traffic is likely behind
us. A key to the recovery is universal implementation of the re-start measures
agreed through the International Civil Aviation Organisation (ICAO) to keep
passengers and crew safe. And, with the help of effective contact tracing,
these measures should give governments the confidence to open borders without
quarantine measures. That’s an important part of the economic recovery because
about 10 per cent of the world’s GDP is from tourism and much of that depends
on air travel. Getting people safely flying again will be a powerful economic
boost.”
Data shows at the low point in April, global air travel was
roughly 95 per cent below 2019 levels. IATA expects traffic for the whole of
2020 to fall by 54.7 per cent compared to last year, with passenger numbers
predicted to be at their lowest level since 2006.
However, revenues are expected to fall faster than demand as
airlines attempt to encourage passengers to return through price stimulation,
according to IATA. This paired with continued costs and low load factors will
add to airlines’ woes.
European airlines’ recovery will be boosted by the
progressive reopening of borders in the region, but net profit is still
expected to hit a loss of $21.5 billion. Asia Pacific carriers stand to lose $29
billion, followed by North America at $23.1 billion. Africa stands to be the
worst-hit region, with revenue passenger kilometres (RPKs) predicted to fall by
58.5 per cent, IATA said.
The picture looks slightly less grim in 2021, with the
industry expected to cut losses to $15.8 billion, but passenger levels will
still be low at 3.38 billion – roughly the same as 2014.
De Juniac concluded: “Airlines will still be financially
fragile in 2021… The cut in losses will come from reopened borders leading to
increased volumes of travellers… Competition among airlines will no doubt be
even more intense. That will translate into strong incentives for travellers to
take to the skies again. The challenge for 2022 will be turning the reduced
losses of 2021 into the profits that airlines will need to pay off their debts
from this terrible crisis.”