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About iPMI Magazine

Due to the nomadic nature of the international private medical insurance (IPMI) industry, iPMI Magazine is an internet based news service for worldwide insurance and assistance professionals who need to understand the impacts of insurance and healthcare policy, regulatory, and legislative developments.

Over 40,000 senior level business decision makers, in over 120 countries, rely on iPMI Magazine to stay 1 step ahead of the risk and on the inside track of international PMI. Covering business travellers, high net worth individuals, expatriate and leisure travel markets, iPMI Magazine is the only international news source covering the most exciting sector of international health insurance: international private medical insurance.

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Air Cargo Posts Strongest First Half-Year Growth Since 2017

Data for global air cargo markets for June showing a 9.9% improvement on pre-COVID-19 performance (June 2019).

This pushed first half-year air cargo growth to 8%, its strongest first half performance since 2017 (when the industry posted 10.2% year-on-year growth).

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

  • Global demand for June 2021, measured in cargo tonne-kilometers (CTKs*), was up 9.9% compared to June 2019.
  • Regional variations in performance are significant. North American carriers contributed 5.9 percentage points (ppts) to the 9.9% growth rate in June. Middle East carriers contributed 2.1 ppts, European airlines 1.6 ppts, African airlines 0.5 ppts and Asia-Pacific carriers 0.3 ppts. Latin American carriers did not support the growth, shaving 0.5 ppts off the total.
  • Overall capacity, measured in available cargo tonne-kilometers (ACTKs), remained constrained at 10.8% below pre-COVID-19 levels (June 2019) due to the ongoing grounding of passenger aircraft. Belly capacity was down 38.9% on June 2019 levels, partially offset by a 29.7% increase in dedicated freighter capacity.
  • Underlying economic conditions and favorable supply chain dynamics remain highly supportive for air cargo:
    • The US inventory to sales ratio is at a record low. This means that businesses have to quickly refill their stocks, and typically use air cargo to do so.
  • The Purchasing Managers Indices (PMIs) – leading indicators of air cargo demand – show that business confidence, manufacturing output and new export orders are growing at a rapid pace in most economies. Concerns of a significant consumer shift from goods to services have not materialized.
  • The cost-competitiveness and reliability of air cargo relative to that of container shipping has improved. The average price of air cargo relative to shipping has reduced considerably. And scheduling reliability of ocean carriers has dropped, in May it was around 40% compared to 70-80% prior to the crisis.

“Air cargo is doing brisk business as the global economy continues its recovery from the COVID-19 crisis. With first-half demand 8% above pre-crisis levels, air cargo is a revenue lifeline for many airlines as they struggle with border closures that continue to devastate the international passenger business. Importantly, the strong first-half performance looks set to continue,” said Willie Walsh, IATA’s Director General.  

JUNE 2021
% VS JUNE 2019
WORLDSHARE1 CTK ACTK CLF(%-PT)​2 CLF(LEVEL)​3
Total Market
100%
9.9%
-10.8%
10.7%
56.5%
Africa
2.0%
32.0%
-7.0%
14.2%
48.0%
Asia Pacific
32.6%
0.9%
-21.6%
15.0%
67.6%
Europe
22.3%
6.7%
-15.0%
12.7%
62.6%
Latin America
2.4%
-19.9%
-23.0%
1.5%
38.1%
Middle East
13.0%
17.1%
-8.9%
12.9%
58.1%
North America
27.8%
24.0%
3.7%
7.5%
45.8%

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

June Regional Performance

Asia-Pacific airlines saw demand for international air cargo increase by 3.8% in June 2021 compared to the same month in 2019. International capacity remained constrained in the region, down 19.8% versus June 2019. Even though demand remains high, the region faces moderate headwinds from the lack of international capacity and manufacturing PMIs that are not as strong as in Europe and the US.

North American carriers posted a 23.4% increase in international demand in June 2021 compared to June 2019. Underlying economic conditions and favorable supply chain dynamics remain supportive for air cargo carriers in North America. International capacity decreased by 2.1% compared with June 2019.

European carriers posted a 6.6% increase in international demand in June 2021 compared to the same month in 2019. International capacity decreased by 16.2% in June 2021 versus June 2019. Manufacturing PMIs are very strong in Europe indicating that market dynamics remain supportive for air cargo carriers in Europe.

Middle Eastern carriers posted a 17.1% rise in international cargo volumes in June 2021 versus June 2019, boosted by strong performances on the Middle East to Asia and Middle East to North America trade routes. International capacity in June was down 9% compared to the same month in 2019.

Latin American carriers reported a decline of 22.9% in international cargo volumes in June compared to the 2019 period. This was the worst performance of all regions and a weakening of performance compared to the previous month. International capacity decreased 28.4% in June 2021 compared to June 2019. This weak performance is mostly due to local airlines losing market share to carriers from other regions.

African airlines’ international cargo demand in June increased 33.5% compared to the same month in 2019. This was the strongest performance of all regions, but notably on small volumes (African carriers carry 2% of global cargo). International capacity in June decreased by 4.9% compared to the same month in 2019.

Download complete Air Cargo Market Analysis for June 2021

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From Bad to Worse: January Passenger Demand Falls Further

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.

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Insufficient Capacity Dampens Air Cargo In August 2020

Data for global air freight markets in August showing that improvement remains slow amid insufficient capacity.

Demand moved slightly in a positive direction month-on-month; however, levels remain depressed compared to 2019. Improvement continues at a slower pace than some of the traditional leading indicators would suggest. This is due to the capacity constraint from the loss of available belly cargo space as passenger aircraft remain parked.  

  • Global demand, measured in cargo tonne-kilometers (CTKs*), was 12.6% below previous-year levels in August (-14% for international operations). That is a modest improvement from the 14.4% year-on-year drop recorded in July. Seasonally-adjusted demand grew by 1.1% month-on-month in August.
  • Global capacity, measured in available cargo tonne-kilometers (ACTKs), shrank by 29.4% in August (‑31.6% for international operations) compared to the previous year. This is basically unchanged from the 31.8% year-on-year drop in July.
  • Belly capacity for international air cargo was 67% below the levels of August 2019 owing to the withdrawal of passenger services amid the COVID-19 pandemic. This was partially offset by a 28.1% increase in dedicated freighter capacity. Daily widebody freighter utilization is close to 11 hours per day, the highest levels since these figures have been tracked in 2012.
  • Economic activity continued to recover in August reflected, among other things, in the performance of the Purchasing Managers’ Index (PMI) indicator of economic health in the manufacturing sector:
  • The new export orders component of the manufacturing PMI rose by 5.1% year-on-year, its best performance since late 2017.
  • The PMI tracking global manufacturing output increased month-on-month and remained above the 50-mark, indicating growth.

“Air cargo demand improved by 1.8 percentage points in August compared to July. That’s still down 12.6% on previous year levels and well below the 5.1% improvement in the manufacturing PMI. Improvement is being stalled by capacity constraints as large parts of the passenger fleet, which normally carries 50% of all cargo, remain grounded. The peak season for air cargo will start in the coming weeks, but with severe capacity constraints shippers may look to alternatives such as ocean and rail to keep the global economy moving,” said Alexandre de Juniac, IATA's Director General and CEO.

AUGUST 2020 (% YEAR-ON-YEAR) WORLDSHARE1 CTK ACTK CLF(%-PT)​2 CLF(LEVEL)​3
International
100%
-12.6%
-29.4%
10.6%
54.8%
Africa
1.8%
-0.2%
-37.9%
19.0%
50.2%
Asia Pacific
34.5%
-20.1%
-33.5%
10.3%
61.6%
Europe
23.6%
-18.9%
-32.1%
9.3%
56.8%
Latin America
2.8%
-27.3%
-43.5%
10.6%
47.8%
Middle East
13.0%
-6.9%
-24.3%
10.0%
53.5%
North America
24.3%
1.7%
-23.3%
12.0%
48.9%

August Regional Performance

Asia-Pacific airlines saw demand for international air cargo fall 18.3% in August 2020 compared to the same period a year earlier. After a robust initial recovery in May, month-on-month growth in seasonally-adjusted demand declined for the second consecutive month. International capacity is particularly constrained in the region, down 35%.

North American carriers reported that demand fell 4% compared to the previous year—the third consecutive month with a single-digit decline. This steady performance is due in part to strong domestic and transpacific demand on the Asia-North America route, reflecting e-commerce demand for products manufactured in Asia. International capacity decreased 28.2%.

European carriers reported a decrease in demand of 19.3% compared to the previous year. Improvements have been slight but consistent since April’s performance of -33%. Demand on most key trade lanes to / from the region remained weak. The large Europe–Asia market was down 18.6% year-on-year in August. International capacity decreased 33.5%.

Middle Eastern carriers reported a decline of 6.8% in year-on-year international cargo volumes in August, a significant improvement from the 15.1% fall in July. Regional airlines have aggressively added capacity in the last few months with international capacity improving from a 42% fall at the trough in April, to a decline of 24.2% in August, the most resilient of all regions. Demand on trade routes to and from Asia and North America remained strong with demand down 3.3% and up 2.3% respectively year-on-year.

Latin American carriers reported demand steady at -26.1% compared to the previous year, ending three consecutive months of deteriorating demand. Demand on trade routes between Latin America (particularly Central America) and North America have compensated for weakness on other routes. Capacity remains significantly constrained in the region with international capacity decreasing 38.5% in August, the largest fall of any region. 

African airlines saw demand increase by 1% in August. This was the fourth consecutive month in which the region posted the strongest increase in international demand and only instance of year-on-year growth among all regions in international volumes. Investment flows along the Africa-Asia route continue to drive the regional outcomes.

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Traffic Forecast Downgrade After Dismal Summer

The International Air Transport Association (IATA) downgraded its traffic forecast for 2020 to reflect a weaker-than-expected recovery, as evidenced by a dismal end to the summer travel season in the Northern Hemisphere.

IATA now expects full-year 2020 traffic to be down 66% compared to 2019. The previous estimate was for a 63% decline.  

August passenger demand continued to be hugely depressed against normal levels, with revenue passenger kilometers (RPKs) down 75.3% compared to August 2019. This was only slightly improved compared to the 79.5% annual contraction in July. Domestic markets continued to outperform international markets in terms of recovery, although most remained substantially down on a year ago. August capacity (available seat kilometers or ASKs) was down 63.8% compared to a year ago, and load factor plunged 27.2 points to an all-time low for August of 58.5%.

Based on flight data, the recovery in air passenger services was brought to a halt in mid-August by a return of government restrictions in the face of new COVID-19 outbreaks in a number of key markets. Forward bookings for air travel in the fourth quarter show that the recovery since the April low point will continue to falter. Whereas the decline in year-on-year growth of global RPKs was expected to have moderated to -55% by December, a much slower improvement is now expected with the month of December forecast to be down 68% on a year ago.

“August’s disastrous traffic performance puts a cap on the industry’s worst-ever summer season. International demand recovery is virtually non-existent and domestic markets in Australia and Japan actually regressed in the face of new outbreaks and travel restrictions. A few months ago, we thought that a full-year fall in demand of -63% compared to 2019 was as bad as it could get. With the dismal peak summer travel period behind us, we have revised our expectations downward to -66%,” said Alexandre de Juniac, IATA’s Director General and CEO.

AUGUST 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100.0%
-75.3%
-63.8%
-27.2%
58.5%
Africa
2.1%
-87.4%
-75.5%
-36.6%
39.0%
Asia Pacific
34.6%
-69.2%
-60.3%
-19.0%
65.0%
Europe
26.8%
-73.0%
-62.1%
-25.5%
63.5%
Latin America
5.1%
-82.8%
-77.5%
-19.3%
63.9%
Middle East
9.1%
-91.3%
-80.8%
-44.9%
37.2%
North America
22.3%
-77.8%
-59.4%
-39.5%
47.7%

International Passenger Markets

August international passenger demand plummeted 88.3% compared to August 2019, mildly improved over the 91.8% decline recorded in July. Capacity sagged 79.5%, and load factor fell 37.0 percentage points to 48.7%.

Asia-Pacific airlines’ August traffic sank 95.9% compared to the year-ago period, barely budged from a 96.2% drop in July, and the steepest contraction among regions. Capacity dived 90.4% and load factor shrank 48.0 percentage points to 34.8%.

European carriers’ August demand plunged 79.9% compared to last year, improved from an 87.0% drop in July, as travel restrictions were lifted in the Schengen Area. However, more recent flight data suggests this trend has reversed amid a return to lockdown and quarantine in some markets. Capacity fell 68.7% and load factor dropped by 32.1 percentage points to 57.1%, which was the highest among regions.

Middle Eastern airlines had a 92.3% fall in demand for August, compared with a 93.3% decline in July. Capacity collapsed 81.9%, and load factor sank 47.1 percentage points to 35.3%.

North American carriers’ traffic tumbled 92.4% in August, little changed compared to 94.4% decline in July. Capacity fell 82.6%, and load factor plunged 49.9 percentage points to 38.5%.

Latin American airlines had a 93.4% demand drop in August compared to the same month last year, versus a 94.9% drop in July. Capacity crumbled 90.1% and load factor dropped 27.8 percentage points to 56.1%, second highest among the regions.

African airlines’ traffic sank 90.1% in August, slightly improved over a 94.6% decline in July. Capacity contracted 78.4%, and load factor fell 41.0 percentage points to 34.6%, which was the lowest among regions.

Domestic Passenger Markets

Domestic traffic fell 50.9% in August. This was a mild improvement compared to a 56.9% decline in July. Domestic capacity fell 34.5% and load factor dropped 21.5 percentage points to 64.2%.

AUGUST 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
36.2%
-50.9%
-34.5%
-21.5%
64.2%
Dom. Australia
0.8%
-91.5%
-81.2%
-44.9%
37.1%
Dom. Brazil
1.1%
-67.0%
-64.3%
-6.4%
76.1%
Dom. China P.R.
5.1%
-19.1%
-5.9%
-12.3%
75.3%
Dom. India
1.3%
-73.6%
-66.0%
-19.1%
66.2%
Dom. Japan
6.1%
-68.6%
-28.4%
-45.6%
35.6%
Dom. Russian Fed.
1.5%
-3.8%
-9.3%
-4.6%
86.4%
Dom. US
14.0%
-69.3%
-45.7%
-37.7%
48.9%

US carriers’ August traffic was down 69.3% compared to August 2019, only a slight improvement compared to July, when traffic fell 71.5%. An increase in outbreaks and quarantines in key domestic markets contributed to the disappointing result.

Russian airlines saw their domestic traffic rise 3.8% compared to August 2019, the first market to see an annual increase since the onset of the pandemic. Falling fares along with a boom in domestic tourism were among the main contributors to the positive swing.

The Bottom Line:

“Traditionally, cash generated during the busy summer season in the Northern Hemisphere provides airlines with a cushion during the lean autumn and winter seasons. This year, airlines have no such protection. Absent additional government relief measures and a reopening of borders, hundreds of thousands of airline jobs will disappear. But it is not just airlines and airline jobs at risk. Globally tens of millions of jobs depend on aviation. If borders don’t reopen the livelihoods of these people will be at grave risk. We need an internationally agreed regime of pre-departure COVID-19 testing to give governments the confidence to reopen borders, and passengers the confidence to travel by air again,” said de Juniac.

Read more...

Airlines & Airports Issue Stark Warning To European PMs On Inconsistent Approach To Travel Restrictions

Europe’s airline and airport associations have written to Prime Ministers, Transport, Health and Home Affairs Ministers across the European Union, Schengen and the UK, setting out deep concerns over their failure to implement coherent and science-based approaches to travel restrictions.

The letter, sent jointly from Airports Council International Europe (ACI EUROPE), Airlines for Europe (A4E) and the International Air Transport Association (IATA), is highly critical of the introduction of new restrictions relating to selected countries. Many of these restrictions, state the organisations, are inconsistent with the principles laid out by the World Health Organization (WHO) and the European Centre for Disease Prevention and Control (ECDC).

The aviation sector has been dealt a crippling economic blow by the pandemic. Despite repeated calls for a science-based, harmonised and coordinated approach to new restrictions – differing national approaches have emerged. Some of these unilateral national measures are contrary to expert guidance and further damage consumer confidence. Moreover, the imposition of such restrictions fails to take into account other options governments have to protect their citizens, such as effective track-and-trace systems.

“The European Aviation sector is urging EU/Schengen States and the UK to reconsider restrictions to travel that have been imposed between them – including quarantines”, state the three associations in the letter. “We fail to see any valid science-based and proportionate justification for such restrictions from a health policy perspective”.

The aviation associations assert that renewed efforts must be urgently put into:

  • Effectively co-ordinating and aligning responses to the evolving epidemiological situation at EU level and in close co-operation with the UK, to be addressed urgently and jointly by home affairs, transport and health ministries and the European Commission;
  • Re-enforcing the principle of risk-based and proportionate measures – localising restrictions and NOT imposing blanket country bans, with quarantine used as a very last resport – following ECDC guidance;
  • Ensuring the interoperabiliy of contact tracing apps, as none of the existing apps are interoperable;
  • A harmonised implementation of the EASA/ECDC and ICAO Take-Off Aviation Health Safety Protocols;
  • Informing the public accordingly and in close cooperation with the travel and tourism industries.
Read more...

Recovery Delayed As International Travel Remains Locked Down

The International Air Transport Association (IATA) released an updated global passenger forecast showing that the recovery in traffic has been slower than had been expected.

In the base case scenario:

  • Global passenger traffic (revenue passenger kilometers or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.
  • The recovery in short haul travel is still expected to happen faster than for long haul travel. As a result, passenger numbers will recover faster than traffic measured in RPKs. Recovery to pre-COVID-19 levels, however, will also slide by a year from 2022 to 2023. For 2020, global passenger numbers (enplanements) are expected to decline by 55% compared to 2019, worsened from the April forecast of 46%.

June 2020 passenger traffic foreshadowed the slower-than-expected recovery. Traffic, measures in RPK, fell 86.5% compared to the year-ago period. That is only slightly improved from a 91.0% contraction in May. This was driven by rising demand in domestic markets, particularly China. The June load factor set an all-time low for the month at 57.6%.

The more pessimistic recovery outlook is based on a number of recent trends:

  • Slow virus containment in the US and developing economies: Although developed economies outside of the US have been largely successful in containing the spread of the virus, renewed outbreaks have occurred in these economies, and in China. Furthermore there is little sign of virus containment in many important emerging economies, which in combination with the US, represent around 40% of global air travel markets. Their continued closure, particularly to international travel, is a significant drag on recovery.
  • Reduced corporate travel: Corporate travel budgets are expected to be very constrained as companies continue to be under financial pressure even as the economy improves. In addition, while historically GDP growth and air travel have been highly correlated, surveys suggest this link has weakened, particularly with regard to business travel, as video conferencing appears to have made significant inroads as a substitute for in-person meetings.
  • Weak consumer confidence: While pent-up demand exists for VFR (visiting friends and relatives) and leisure travel, consumer confidence is weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19. Some 55% of respondents to IATA’s June passenger survey don’t plan to travel in 2020.

Owing to these factors, IATA’s revised baseline forecast is for global enplanements to fall 55% in 2020 compared to 2019 (the April forecast was for a 46% decline). Passenger numbers are expected to rise 62% in 2021 off the depressed 2020 base, but still will be down almost 30% compared to 2019. A full recovery to 2019 levels is not expected until 2023, one year later than previously forecast.

Meanwhile, since domestic markets are opening ahead of international markets, and because passengers appear to prefer short haul travel in the current environment, RPKs will recover more slowly, with passenger traffic expected to return to 2019 levels in 2024, one year later than previously forecast. Scientific advances in fighting COVID-19 including development of a successful vaccine, could allow a faster recovery. However, at present there appears to be more downside risk than upside to the baseline forecast.

“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak. What improvement we have seen has been domestic flying. International markets remain largely closed. Consumer confidence is depressed and not helped by the UK’s weekend decision to impose a blanket quarantine on all travelers returning from Spain. And in many parts of the world infections are still rising. All of this points to a longer recovery period and more pain for the industry and the global economy,” said Alexandre de Juniac, IATA’s Director General and CEO.

“For airlines, this is bad news that points to the need for governments to continue with relief measures—financial and otherwise. A full Northern Winter season waiver on the 80-20 use-it-or-lose it slot rule, for example, would provide critical relief to airlines in planning schedules amid unpredictable demand patterns. Airlines are planning their schedules. They need to keep sharply focused on meeting demand and not meeting slot rules that were never meant to accommodate the sharp fluctuations of a crisis. The earlier we know the slot rules the better, but we are still waiting for governments in key markets to confirm a waiver,” said de Juniac.

June 2020 Performance

JUNE 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100.0%
-86.5%
-80.1%
-26.8%
57.6%
Africa
2.1%
-96.5%
-84.5%
-54.9%
16.2%
Asia Pacific
34.6%
-74.4%
-69.6%
-18.5%
63.8%
Europe
26.8%
-93.7%
-90.0%
-31.9%
55.5%
Latin America
5.1%
-91.2%
-89.0%
-16.7%
66.6%
Middle East
9.1%
-95.5%
-90.4%
-40.7%
35.7%
North America
22.3%
-86.3%
-76.9%
-36.5%
52.4%

1) % of industry RPKs in 2019     2) Year-on-year change in load factor     3) Load Factor Level

International Passenger Markets

June international traffic shrank by 96.8% compared to June 2019, only slightly improved over a 98.3% decline in May, year-over-year. Capacity fell 93.2% and load factor contracted 44.7 percentage points to 38.9%.

Asia-Pacific airlines’ June traffic plummeted 97.1% compared to the year-ago period, little improved from the 98.1% decline in May. Capacity fell 93.4% and load factor shrank 45.8 percentage points to 35.6%.

European carriers saw demand topple 96.7% in June versus a year ago, compared to a 98.7% decline in May. Capacity dropped 94.4% and load factor lessened 35.7 percentage points to 52.0%.

Middle Eastern airlines traffic collapsed 96.1% for June against June 2019, compared with a 97.7% demand drop in May. Capacity contracted 91.1%, and load factor crumbled to 33.3%, down 43.1% compared to a year ago. 

North American carriers had a 97.2% traffic decline in June, barely improved from a 98.3% decline in May. Capacity fell 92.8%, and load factor dropped 53.8 percentage points to 34.1%.

Latin American airlines suffered a 96.6% demand drop in June compared to the same month last year, from a 98.1% drop in May. Capacity fell 95.7% and load factor sagged 17.7 percentage points to 66.2%, which was the highest among the regions.

African airlines’ traffic sank 98.1% in June, little changed from a 98.6% demand drop in May. Capacity contracted 84.5%, and load factor dived 62.1 percentage points to just 8.9% of seats filled, lowest among regions.

Domestic Passenger Markets

Domestic traffic demand fell 67.6% in June, improved from a 78.4% decline in May. Capacity fell 55.9% and load factor dropped 22.8 percentage points to 62.9%.

JUNE 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
36.2%
-67.6%
-55.9%
-22.8%
62.9%
Australia
0.8%
-93.8%
-89.1%
-33.8%
44.4%
Brazil
1.1%
-84.7%
-83.3%
-7.1%
74.7%
China P.R.
9.8%
-35.5%
-21.3%
-15.2%
69.5%
Japan
1.1%
-74.9%
-63.4%
-22.4%
48.8%
Russian Fed.
1.5%
-58.0%
-36.4%
-28.9%
56.4%
US
14.0%
-80.1%
-67.4%
-34.9%
54.7%

1) % of industry RPKs in 2019     2) Year-on-year change in load factor     3) Load Factor Level

China’s carriers continued to lead the recovery, with traffic down 35.5% in June compared to the year-ago period, raised from a 46.3% decline in May.

Japan’s airlines saw improved domestic demand after the state of COVID-19 emergency was lifted in late May. Domestic RPKs fell by 74.9% year-on-year in June, compared with around 90% annual declines in the previous two months.

The Bottom Line

Domestic traffic improvements notwithstanding, international traffic, which in normal times accounts for close to two-thirds of global air travel, remains virtually non-existent. Most countries are still closed to international arrivals or have imposed quarantines, that have the same effect as an outright lockdown. Summer — our industry’s busiest season — is passing by rapidly; with little chance for an upswing in international air travel unless governments move quickly and decisively to find alternatives to border closures, confidence-destroying stop-start re-openings and demand-killing quarantine,” said de Juniac.

IATA urges governments to implement a layer of measures including the International Civil Aviation Organization’s (ICAO’s) global guidelines for restoring air connectivity contained in ICAO’s Takeoff: Guidance for Air Travel through the COVID-19 Public Health Crisis. IATA also sees potential for accurate, fast, scalable and affordable testing measures and comprehensive contact tracing to play a role in managing the risk of virus spread while re-connecting economies and re-starting travel and tourism. “We need to learn to manage the risks of living with COVID-19 with targeted and predictable measures that will safely re-build traveler confidence and shattered economies,” said de Juniac.

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Air Cargo Demand Slumps In February As COVID-19 Takes Hold

February 2020 data for global air freight markets showing that demand, measured in cargo tonne kilometers (CTKs*), decreased by 1.4% compared to the same period in 2019.

Adjusting the comparison for the impact of the Lunar New Year, which fell in February in 2019, and the leap year in 2020, which meant an additional day of activity, seasonally-adjusted demand was down 9.1% month-on-month in February.

By February, the negative impacts of the COVID-19 crisis on air cargo demand were becoming visible. The month witnessed several significant developments:

  • Manufacturing production in China, one of the world’s largest air cargo markets, dropped sharply due to widespread factory closures and travel restrictions.
  • Global export orders fell to a historically low level. The global Purchasing Managers Index (PMI) is in contraction territory, with all major trading nations reporting falling orders.
  • Significant cargo capacity was lost as a result of airlines reducing passenger operations in response to government travel restrictions due to COVID-19, severely impacting global supply chains.

Cargo capacity, measured in available cargo tonne kilometers (ACTKs), dropped by 4.4% year-on-year in February 2020. This is subject to the same distortions as the non-seasonally adjusted demand numbers.

“The spread of COVID-19 intensified over the month of February, and with it, the impact on air cargo. Adjusted demand for air cargo fell by 9.1%. Asia-Pacific carriers were the most affected with a seasonally-adjusted drop of 15.5%. What has unfolded since is a story of two halves. The disruption of global supply chains led to a fall in demand. But the dramatic disruption in passenger traffic resulted in even deeper cuts to cargo capacity. And the industry is struggling to serve remaining demand with the limited capacity available. We only got a first glimpse of this in February. Among all the uncertainty in this crisis, one thing is clear—air cargo is vital. It is delivering lifesaving drugs and medical equipment. And it is supporting global supply chains. That’s why it is critical for governments to remove any blockers as the industry does all it can to keep the global air cargo network functioning in the crisis and ready for the recovery,” said Alexandre de Juniac, IATA’s Director General and CEO.

Regional Performance

Airlines in Europe suffered a sizeable decline in year-on-year growth in total air cargo volumes in February 2020, while North American and Asia-Pacific carriers experienced more moderate falls. Middle East, Latin America and Africa were the only regions to record growth in air freight demand compared to February 2019.

FEBRUARY 2020 (% YEAR-ON-YEAR) WORLD SHARE1 CTK ACTK CLF(%-PT)​2 CLF(LEVEL)​3
Total Market
100.0%
-1.4%
-4.4%
1.5%
46.4%
Africa
1.8%
6.2%
3.0%
1.1%
36.8%
Asia Pacific
34.6%
-2.2%
-17.7%
8.6%
54.3%
Europe
23.6%
-4.1%
-3.8%
-0.2%
53.1%
Latin America
2.8%
1.8%
-2.6%
1.5%
34.2%
Middle East
13.0%
4.3%
6.0%
-0.7%
46.1%
North America
24.3%
-1.8%
4.1%
-2.2%
37.2%

1- % of industry CTKs in 2019 2- Year-on-year change in load factor 3-Load factor level

Asia-Pacific airlines saw demand for air cargo contract by 2.2% in February 2020, compared to the year-earlier period. Seasonally-adjusted cargo demand fell by 15.5% compared to January 2020, to levels last seen in early 2014. The drop in demand was largely due to the impact of COVID-19. Capacity decreased 17.7% - the largest fall since early 2013. Cargo capacity in China dropped sharply in February, driven in large part by the collapse of belly-hold capacity.

North American airlines saw demand decrease by 1.8% in February 2020, compared to the same period a year earlier. Capacity increased by 4.1%. Cargo traffic on the Asia-North America trade lanes decreased by 2.4% year-on-year as a result of factory closures in Asia due to COVID-19.

European airlines posted a 4.1% decrease in cargo demand in February 2020 compared to the same period a year earlier. European carriers were among the first to cancel flights to and from Asia, contributing to the drop in demand in February. The Within Europe market decreased by 7.8% year-on-year. This suggests that the region was affected by global supply chain disruptions and early COVID-19 containment measures – notably in Northern Italy, an important manufacturing region. Capacity decreased by 3.8% year-on-year.

Middle Eastern airlines’ cargo demand increased 4.3% in February 2020 compared to the year-ago period. Capacity increased by 6.0%. However, given the Middle East’s position connecting trade between China and the rest of the world, the region’s carriers have significant exposure to the impact of COVID-19 in the period ahead. 

Latin American airlines experienced an increase in freight demand in February 2020 of 1.8%. Capacity decreased by 2.6% year-on-year. The region was relatively unaffected by the COVID‑19 outbreak in February. However, disrupted global supply chains and a fragile economic backdrop in some countries in the region continue to create headwinds for air cargo.

African carriers posted the fastest growth of any region for the 12th consecutive month in February 2020, with an increase in demand of 6.2% compared to the same period a year earlier. Capacity grew 3.0% year-on-year. The Africa-Asia and Africa-Middle East trade lanes continue to bring robust growth to the region.

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Passenger Demand Plunges on COVID-19 Travel Restrictions

Global passenger traffic data for February 2020 showing that demand (measured in total revenue passenger kilometers or RPKs) fell 14.1% compared to February 2019.

This was the steepest decline in traffic since 9.11 and reflected collapsing domestic travel in China and sharply falling international demand to/from and within the Asia-Pacific region, owing to the spreading COVID-19 virus and government-imposed travel restrictions. February capacity (available seat kilometers or ASKs) fell 8.7% as airlines scrambled to trim capacity in line with plunging traffic, and load factor fell 4.8 percentage points to 75.9%.

“Airlines were hit by a sledgehammer called COVID-19 in February. Borders were closed in an effort to stop the spread of the virus. And the impact on aviation has left airlines with little to do except cut costs and take emergency measures in an attempt to survive in these extraordinary circumstances. The 14.1% global fall in demand is severe, but for carriers in Asia-Pacific the drop was 41%. And it has only grown worse. Without a doubt this is the biggest crisis that the industry has ever faced,” said Alexandre de Juniac, IATA’s Director General and CEO.

FEBRUARY 2020 (% YEAR-ON-YEAR) WORLD SHARE RPK ASPK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100.0%
-14.1%
-8.7%
-4.8%
75.9%
Africa
2.1%
-0.7%
5.1
-3.9%
66.8%
Asia Pacific
34.7%
-41.3%
-28.2%
-15.1%
67.8%
Europe
26.8%
0.7%
1.2%
-0.5%
81.3%
Latin America
5.1%
3.1%
3.5%
-0.3%
81.2%
Middle East
9.0%
1.7%
1.5%
0.1%
72.5%
North America
22.2%
5.5%
4.7%
0.6%
81.1%

1-% of Industry RPKs in 2019 2-Year-on-year chnage in load factor 3-Load factor level

International Passenger Markets

February international passenger demand fell 10.1% compared to February 2019, the worst outcome since the 2003 SARS outbreak and a reversal from the 2.6% traffic increase recorded in January. Europe and Middle East were the only regions to see a year-over-year traffic rise. Capacity fell 5.0%, and load factor plunged 4.2 percentage points to 75.3%.

Asia-Pacific airlines’ February traffic plummeted 30.4% compared to the year-ago period, steeply reversing a 3.0% gain recorded in January. Capacity fell 16.9% and load factor collapsed to 67.9%, a 13.2-percentage point drop compared to February 2019.

European carriers’ February demand was virtually flat compared to a year ago (+0.2%), the region’s weakest performance in a decade. The slowdown was driven by routes to/from Asia, where the growth rate slowed by 25 percentage points in February, versus January. Demand  in markets within Europe performed solidly despite some initial flight suspensions on the routes to/from Italy. However, March data will reflect the impact of the spread of the virus across Europe and the related disruptions to travel. February capacity rose 0.7%, and load factor slipped 0.4 percentage point to 82.0%, which was the highest among regions.

Middle Eastern airlines posted a 1.6% traffic increase in February, a slowdown from the 5.3% year-over-year growth reported in January largely owing to a slowdown on Middle East-Asia-Pacific routes. Capacity increased by 1.3%, and load factor edged up 0.2 percentage point to 72.6%. 

North American carriers had a 2.8% traffic decline in February, reversing a 2.9% gain in January, as international entry restrictions hit home and volumes on Asia-North America routes plunged 30%. Capacity fell 1.5%, and load factor dropped 1.0 percentage point to 77.7%.

Latin American airlines experienced a 0.4% demand drop in February compared to the same month last year. This actually was an improvement over the 3.5% decline recorded in January. However, the spread of the virus and resulting travel restrictions will be reflected in March results. Capacity also fell 0.4% and load factor was flat compared to February 2019 at 81.3%.

African airlines’ traffic slipped 1.1% in February, versus a 5.6% traffic increase recorded in January and the weakest outcome since 2015. The decline was driven by around a 35% year-on-year traffic fall in the Africa-Asia market. Capacity rose 4.8%, however, and load factor sagged 3.9 percentage points to 65.7%, lowest among regions.

Domestic Passenger Markets

Demand for domestic travel dropped 20.9% in February compared to February 2019, as Chinese domestic market collapsed in the face of the government lockdown. Domestic capacity fell 15.1% and load factor dropped 5.6 percentage points to 77.0%.

FEBRUARY 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
36.2%
-20.9%
-15.1%
-5.6%
77.0%
Dom. Australia
0.8%
-4.0%
-1.2%
-2.2%
75.6%
Domestic Brazil
1.1%
3.8%
4.3%
-0.4%
82.0%
Dom. China P. R.
9.5%
-83.6%
-70.4%
-39.3%
48.5%
Domestic India
1.6%
8.4%
9.9%
-1.2%
88.1%
Domestic Japan
1.1%
-2.8%
3.9%
-4.7%
67.1%
Dom. Russia. Fed.
1.5%
7.7%
9.1%
-1.0%
75.7%
Domestic US
14.0%
10.1%
8.3%
1.3%
82.9%

1-% of Industry RPKs in 2019 2-Year-on-year chnage in load factor 3-Load factor level

Chinese airlines’ domestic traffic fell 83.6% in February, the worst outcome since IATA began tracking the market in 2000. With the easing of some restrictions on internal travel in March, domestic demand is showing some tentative signs of improvement.

US airlines enjoyed one of their strongest months in February, as domestic traffic jumped 10.1%. Demand fell  toward the end of the month, however, with the full impact of COVID-19 expected to show in March results.

The Bottom Line

“This is aviation’s darkest hour and it is difficult to see a sunrise ahead unless governments do more to support the industry through this unprecedented global crisis. We are grateful to those that have stepped up with relief measures, but many more need to do so. Our most recent analysis shows that airlines may burn through $61 billion of their cash reserves during the second quarter ending 30 June 2020. This includes $35 billion in sold-but-unused tickets as a result of massive flight cancellations owing to government-imposed travel restrictions. We welcome the actions of those regulators who have relaxed rules so as to permit airlines to issue travel vouchers in lieu of refunds for unused tickets; and we urge others to do the same. Air transport will play a much-needed role in supporting the inevitable recovery. But without additional government action today, the industry will not be in a position to help when skies are brighter tomorrow,” said de Juniac.

 

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Passenger Revenues Could Plummet $252 Billion Below 2019’s Figure

Owing to the severity of travel restrictions and the expected global recession, IATA now estimates that industry passenger revenues could plummet $252 billion or 44% below 2019’s figure. This is in a scenario in which severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year.

IATA’s previous analysis of up to a $113 billion revenue loss was made on 5 March 2020, before the countries around the world introduced sweeping travel restrictions that largely eliminated the international air travel market.

“The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates. But without immediate government relief measures, there will not be an industry left standing. Airlines need $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,” said IATA’s Director General and CEO, Alexandre de Juniac.

Slower Recovery

The latest analysis envisions that under this scenario, severe restrictions on travel are lifted after 3 months. The recovery in travel demand later this year is weakened by the impact of global recession on jobs and confidence. Full year passenger demand (revenue passenger kilometers or RPKs) declines 38% compared to 2019. Industry capacity (available seat kilometer or ASKs) in domestic and international markets declines 65% during the second quarter ended 30 June compared to a year-ago period, but in this scenario recovers to a 10% decline in the fourth quarter.

REGION OF AIRLINE REGISTRATION

% CHANGE IN RPKS
(2020 VS. 2019)

EST. IMPACT ON PASS. REVENUE
2020 VS. 2019
(US$ BILLIONS)

Africa
-32%
-4
Asia Pacific
-37%
-88
Europe
-46%
-76
Latin America
-41%
-15
Middle East
-39%
-19
North America
-27%
-50
Industry
-38%
-252

Read Alexandre de Juniac's speech

Check the COVID-19: Updated Impact Assessment (pdf), 24 March 2020

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