AN UNRELENTING CRISIS: Passenger Recovery Disappoints in October
The International Air Transport Association (IATA) announced that the recovery of passenger demand continued to be disappointingly slow in October. Though one has to wonder why IATA thought the demand would have improved given that the pandemic is still in full swing.
Total demand (measured in revenue passenger kilometers or RPKs) was down 70.6% compared to October 2019. This was just a modest improvement from the 72.2% year-to-year decline recorded in September. Capacity was down 59.9% compared to a year ago and load factor fell 21.8 percentage points to 60.2%.
International passenger demand in October was down 87.8% compared to October 2019, virtually unchanged from the 88.0% year-to-year decline recorded in September. Capacity was 76.9% below previous year levels, and load factor shrank 38.3 percentage points to 42.9%.
Domestic demand drove what little recovery there was, with October domestic traffic down 40.8% compared to the prior year. This was improved from a 43.0% year-to-year decline in September. Capacity was 29.7% below 2019 levels and the load factor dropped 13.2 percentage points to 70.4%.
“Fresh outbreaks of COVID-19 and governments’ continued reliance on heavy-handed quarantines resulted in another catastrophic month for air travel demand. While the pace of recovery is faster in some regions than others, the overall picture for international travel is grim. This uneven recovery is more pronounced in domestic markets, with China’s domestic market having nearly recovered, while most others remain deeply depressed,” said Alexandre de Juniac, IATA’s Director General and CEO.
International Passenger Markets
Asia-Pacific airlines’ October traffic collapsed 95.6% compared to the year-ago period, which was unchanged from September. The region continued to suffer from the steepest traffic declines. Capacity plummeted 88.5% and load factor sagged 49.4 percentage points to 30.3%, the lowest among regions.
European carriers’ October demand sank 83.0% versus a year ago, worsened from an 81.2% decline in September. For a second consecutive month, Europe was the only region to see a deterioration in traffic. Capacity contracted 70.4% and load factor fell by 36.7 percentage points to 49.5%.
Middle Eastern airlines saw an 86.7% traffic drop for October, improved from an 89.3% demand drop in September. Capacity dived 73.6%, and load factor declined 36.6 percentage points to 37.0%.
North American carriers’ traffic tumbled 88.2% in October, a slight improvement from a 91.0% decline in September. Capacity plunged 73.1%, and load factor dropped 46.2 percentage points to 36.2%.
Latin American airlines experienced an 86.0% demand drop in October, compared to the same month last year. The region showed the greatest improvement on September when year-on-year demand was down 92.3%. October capacity was 80.3% down and load factor dropped 23.5 percentage points to 57.7%, which was highest among the regions.
African airlines’ traffic sank 78.6% in October, improved from an 84.9% drop in September and the best performance among the regions. Capacity contracted 67.5%, and load factor fell 23.8 percentage points to 45.5%.
China’s domestic traffic was down just 1.4% in October compared to October a year ago. The domestic economy was close to normality and low fares and so-called ’all you can fly’ deals boosted demand.
Russia’s domestic traffic slipped back into negative numbers in October, down 10% after two months of growth. New COVID cases have taken their toll on travelers’ confidence, despite few domestic travel restrictions.
The Bottom Line:
“This crisis is unrelenting. Our latest economic outlook is for airlines to lose US $118.5 billion this year, or $66 for every passenger carried. Assuming borders re-open by mid-2021, the industry will ‘only’ lose $38.7 billion in 2021. Now is the time for governments to step up. The $173 billion of support provided to date has enabled the industry to survive, but more is required to carry the industry through to next summer. IATA has identified a range of market stimulation options that will support the viability of air routes while encouraging people to travel. Without aviation’s $3.5 trillion contribution to global GDP, there can be no broader economic recovery,” said de Juniac.
First published at Travel Industry Today