The International Air Transport Association (IATA) has released a revised outlook for airline industry performance, predicting deep losses into next year.
The trade body predicts a net loss of $118.5 billion for the sector this year, significantly deeper than the $84 billion forecast made in June.
Perhaps more worryingly, a net loss of $39 billion is expected in 2021, with significant revenue not expected to return until quarter four of next year.
Aggressive cost-cutting is thus expected to combine with increased demand during 2021 - due to the re-opening of borders with testing and/or the widespread availability of a vaccine.
“This crisis is devastating and unrelenting.
“Airlines have cut costs by 46 per cent, but revenues are down 61 per cent.
“The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion.
“This loss will be reduced sharply by $80 billion in 2021.
“But the prospect of losing $39 billion next year is nothing to celebrate.
“We need to get borders safely re-opened without quarantine so that people will fly again.
“And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose,” said Alexandre de Juniac, IATA director general.
The Covid-19 crisis challenged the industry for its very survival in 2020.
In the face of a half trillion-dollar revenue drop (from $838 billion in 2019 to $328 billion) airlines cut costs by $365 billion (from $795 billion in 2019 to $430 billion in 2020).
“The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses.
“Were it not for the $173 billion in financial support by governments we would have seen bankruptcies on a massive scale,” said de Juniac.
While the industry will see improved performance in 2021 compared to 2020, the road to recovery is expected to be long and difficult, IATA added.
Passenger volumes are not expected to return to 2019 levels until 2024 at the earliest, with domestic markets recovering faster than international services.
“We have the ability to safely re-open travel with systematic testing.
“We cannot wait on the promise of a vaccine.
“We are preparing for efficient vaccine distribution.
“But testing is the immediate solution to meaningfully re-open air travel.
“With 46 million jobs at risk in the travel and tourism sector alone because of plummeting air travel, we must act fast with solutions that are at hand. We have fast, accurate and scalable testing that can safely do the job.
The airlines are ready. The livelihoods of millions are in the hands of governments and public health authorities. Governments understood the criticality of a viable air transport sector when they invested billions to keep it afloat.
“Now they need to protect those investments by giving airlines the means to safely do business,” concluded de Juniac.