Despite new COVID-19 outbreaks, there is hope for passenger travel, with blanket testing on the horizon and governments offering continued relief measures
Let’s hope the old saying that “the darkest hour is just before the dawn” applies to aviation, because it’s difficult to see how our situation can get much grimmer. The numbers speak for themselves.
In September, total traffic was down 73% compared to September 2019, little changed from August’s performance. International traffic has been stalled at around -90% for the past three months.
This isn’t because people don’t want to fly. Recovery is continuing in domestic markets where travel restrictions have been lifted, and we saw an uptick during the summer when travel to traditional holiday destinations (briefly) became possible.
But new outbreaks of COVID-19, particularly in Europe and the US, are having a hugely negative impact, driving governments toward ever more draconian measures. And even before these latest outbreaks, quarantines made travel virtually impossible.
Cargo is a bright spot: we are within ten percentage points to pre-crisis demand levels. Shortage of capacity, more than lack of demand, likely is holding back a full recovery. But while a surging cargo business may be enough to carry some carriers through the crisis, it cannot sustain the entire industry.
Total passenger traffic is now expected to be down 66% for the full year, with December demand down 68%. Our most recent analysis is that industry revenues will fall 46% in 2021 compared to the 2019 figure of $838 billion. And as of the end of October, the median airline had around 8.5 months of cash left at current cash burn rates. The bottom line is that under these conditions, industry cannot slash costs sufficiently to avoid bankruptcies and more job losses in 2021.
So we need to change the conditions. That means convincing governments that they can safely unlock borders without quarantines. And the key to that is to introduce a globally aligned regime of passenger testing. Testing needs to be fast, highly accurate, easy to do, scalable, and –very important—affordable. Our surveys tell us that a majority of travelers accept pre-departure testing and are willing to undergo it if it means avoiding quarantine. We anticipate that the Council of the International Civil Aviation Organization will include testing as a way to reduce risk in its Phase 2 CART report expected in November.
Because it’s too much to expect a big bang reopening of a critical mass of international markets, governments need to step up with additional relief measures that do not add debt to already over-burdened airline balance sheets.
A globally aligned testing regime and continued relief measures until testing arrives is how we can turn the darkest hour to dawn. I’m an optimist, and I hope governments will take these sensible steps. Because we cannot bear the economic and social costs of a world in which air connectivity is lost. People want and need to travel. Once the freedom to fly becomes possible again, I believe we all will be surprised by the brightness of the new day.
Alexandre de Juniac: Director General and CEO, IATA