IATA predicts 55 per cent decline in airline revenue

Wednesday, April 15, 2020

An updated analysis by International Air Transport Association shows that the Covid-19 crisis will see airline passenger revenues drop by $314 billion in 2020. While the  figure represents a 55 per cent decline compared to 2019.

Earlier on March 24^th,  $252 billion in lost revenues (a fall of 44 per cent against last year) was estimated in a scenario with severe travel restrictions lasting three months.

The updated figures reflect a significant deepening of the crisis since then.

Severe domestic restrictions will last three months and some restrictions on international travel extend beyond the initial period.

Both  Africa and Latin America  had a small presence of the disease and were expected to be less impacted in the March analysis but now it is spreading there as well.

Passenger demand is expected to be down by half this year. This will be driven by the world heading for recession and travel restrictions.

In quarter two the GDP is expected to shrink by six per cent, the passengers demand closely follows GDP progression.So, the impact of reduced economic activity in quarter two alone would result in an eight per cent fall in passenger demand in the third quarter.

In early April the the number of flights globally was down 80 per cent compared to 2019 in large part owing to severe travel restrictions imposed by governments to fight the spread of the virus. Domestic markets could still see the start of an upturn in demand beginning in the third quarter in a first stage of lifting travel restrictions.

It is likely that international markets, however, will be slower to resume as it appears likely that governments will retain these travel restrictions longer.

Alexandre de Juniac, IATA director general mentioned that the industry’s outlook was growing darker by the day.The scale of the crisis makes a sharp V-shaped recovery unlikely.Realistically, it will be a U-shaped recovery with domestic travel coming back faster than the international market.More than half of passenger revenues disappear can be seen disappearing making a $314 billion hit.

The situation remains critical even though governments have stepped up with new or expanded financial relief measures.

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