Travel Industry News at TravelNewsAsia.com since 1997
Tue, 5 October 2021

Airline Industry Losses in 2020-2022 Expected to Reach US$201 Billion

IATA published its latest outlook for airline industry financial performance at its AGM in Boston on Monday.

Highlights include:

- Net industry losses are expected to reduce to $11.6 billion in 2022 after a $51.8 billion loss in 2021 (worsened from the $47.7 billion loss estimated in April). Net 2020 loss estimates have been revised to $137.7 billion (from $126.4 billion). Adding these up, total industry losses in 2020-2022 are expected to reach $201 billion.

- Demand (RPKs) is expected to stand at 40% of 2019 levels for 2021, rising to 61% in 2022.

- Total passenger numbers are expected to reach 2.3 billion in 2021. This will grow to 3.4 billion in 2022 which is similar to 2014 levels and significantly below the 4.5 billion travelers of 2019.

Thai AirAsia X Airbus A330 reg: HS-XTJ. Picture by Steven Howard of TravelNewsAsia.com Click to enlarge.

- Robust demand for air cargo is expected to continue with 2021 demand at 7.9% above 2019 levels, growing to 13.2% above 2019 levels for 2022.

The magnitude of the COVID19 crisis for airlines is enormous. Over the 2020-2022 period total losses could top $200 billion, said Willie Walsh, IATAs Director General. To survive airlines have dramatically cut costs and adapted their business to whatever opportunities were available. That will see the $137.7 billion loss of 2020 reduce to $52 billion this year. And that will further reduce to $12 billion in 2022. We are well past the deepest point of the crisis. While serious issues remain, the path to recovery is coming into view. Aviation is demonstrating its resilience yet again.

The air cargo business is performing well, and domestic travel will near pre-crisis levels in 2022. The challenge is international markets which remain severely depressed as government-imposed restrictions continue.

People have not lost their desire to travel as we see in solid domestic market resilience. But they are being held back from international travel by restrictions, uncertainty and complexity, Walsh said. More governments are seeing vaccinations as a way out of this crisis. We fully agree that vaccinated people should not have their freedom of movement limited in any way. In fact, the freedom to travel is a good incentive for more people to be vaccinated. Governments must work together and do everything in their power to ensure that vaccines are available to anybody who wants them.

Re-establishing global connectivity, the 11.3 million jobs (pre-COVID19) in the aviation industry, and the $3.5 trillion of GDP associated with travel and tourism should be priorities for governments.

Aviation is resilient and resourceful, but the scale of this crisis needs solutions that only governments can provide. Financial support was a lifeline for many airlines during the crisis. Much of thatapproximately $110 billion is in the form of support that needs to be paid back. Combined with commercial borrowing the industry is now highly leveraged. We dont want handouts, but wage support measures to retain critical skills may be necessary for some airlines until governments enable international travel at scale. And regulatory alleviationslike continued slot wavers while international traffic recoverswill be needed well into 2022, said Walsh.

Outlook Drivers

Global demand, measured in RPKs, is recovering steadily.

- In 2021 overall demand is expected to reach 40% of pre-crisis (2019) levels. Capacity is expected to increase faster than demand growth, reaching 50% of pre-crisis levels for 2021. The average passenger load factor in 2021 is expected to be just 67.1%, a level not seen since 1994.

- In 2022 overall demand is expected to reach 61% of pre-crisis (2019) levels. Capacity is expected to continue to increase faster than demand, reaching 67% of pre-crisis levels for 2022. Average passenger load factors are expected to recover to 75.1%, a level exceeded in every year since 2005 until this crisis hit, and far below the 82.6% record set in 2019.

Domestic demand, with fewer restrictions in most countries, is driving the recovery. Global GDP is expected to grow by 5.8% in 2021 and a further 4.1% in 2022. Additionally, accumulated consumer savings (worth 10-20% of GDP in some countries) is supporting the alleviation of pent-up demand in unrestricted domestic markets.

- In 2021 domestic demand is expected to reach 73% of pre-crisis (2019) levels.

- In 2022 domestic demand is expected to reach 93% of pre-crisis (2019) levels.

International demand is the slowest to recover owing to continuing restrictions on the freedom of movement across borders, quarantine measures and traveler uncertainty.

- In 2021 international demand is expected to reach 22% of pre-crisis (2019) levels.

- In 2022 international demand is expected to reach 44% of pre-crisis (2019) levels.

Cargo demand (measured in CTK) is strong as companies continue to re-stock. The World Trade Organization forecasts world trade to grow at 9.5% in 2021 and 5.6% in 2022.

- In 2021 cargo demand is expected to exceed pre-crisis (2019) levels by 8%.

- In 2022 cargo demand is expected to exceed pre-crisis (2019) levels by 13%.

Revenue and Yield

Overall revenues in 2021 are expected to grow by 26.7% compared to 2020 to $472 billion (similar to 2009 levels). Further growth of 39.3% in 2022 will see industry revenues rise to $658 billion (similar to 2011 levels).

- The passenger business will contribute $227 billion to industry revenues in 2021, rising to $378 billion in 2022. Passenger yields declined each year between 2012 and 2020. In 2021 yields are expected to grow by 2.0% and a further 10% in 2022.

- Cargo revenues are expected to rise to a record $175 billion in 2021 with a similar $169 billion expected in 2022. Cargo yields are expected to grow by 15% in 2021 but decline by 8% in 2022.

Costs

Airlines achieved aggressive cost reductions having reduced overall expenses by 34% in 2021 compared to 2019. Costs, however, will rise in 2022 and will be only 15% lower compared with pre-crisis levels with expanded operations and higher fuel prices.

- The price of jet kerosene was the only respite for airlines in 2020. It fell to $46.6/barrel in 2020 from $77/barrel in 2019. Kerosene prices increased to an average of $74.5/barrel in 2021 and are expected to rise further to $77.8/barrel in 2022.

- Non-fuel unit costs rose 19% in 2020 compared to 2019, as fixed costs had to be spread over a dramatically smaller capacity base. This will partially reverse in 2021 with an 8% reduction from 2020 levels. Capacity growth will spread fixed costs more broadly while cost cutting efforts continue. In 2022, we expect a 2% increase.

Vaccinations

Vaccinations are proving to be a key driver for government relaxation of border control measures. Quick progress, with some exceptions, of vaccine distribution in developed economies is progressively giving governments the confidence to re-open borders and people the confidence to travel. Parts of the world with slower vaccine distribution (developing economies and some developed economies in Asia Pacific) will take longer to see an industry recovery.

Regional Aviation Performance

All regions will improve their collective financial performance compared to 2020. The strongest performing region is North America which is expected to see a $5.5 billion loss in 2021 transform to a $9.9 billion profit in 2022. All other regions will see reduced losses in 2022 compared to 2021.

Asia-Pacific carriers are expected to see losses diminish from $11.2 billion in 2021 to $2.4 billion in 2022. The region continues to suffer some of the most draconian travel restrictions. While there has been some alleviation in restrictions, significant improvements in international markets are not expected until later in 2022. Reduced losses are expected to be achieved on the back of large and largely open domestic markets, not least of which is China. The regions carriers are also benefitting disproportionally from the strength of air cargo markets in which they are dominant.

North American carriers are expected to outperform other regions on the back of fast recovery of the US domestic market. The opening of the US market to vaccinated travelers from November 2021 will progress the recovery to international markets. The US industry started to turn cash-positive in the second quarter of 2021 and will be the only region in positive financial territory in 2022 with an expected $9.9 billion profit.

 European carriers will see their losses cut from $20.9 billion in 2021 to $9.2 billion in 2022. Shifting rules and confused application of EC recommendations across Europe compromised the expected positive impact of rising vaccination rates and establishment of the European Digital Covid Certificate. Better coordination between governments is expected to see a broader opening of international markets in the months ahead, boosted significantly by the re-establishment of transatlantic travel for vaccinated travelers. Long-haul demand, however, will significantly lag behind the recovery in intra-European travel.

Latin American carriers will see losses cut from $5.6 billion this year to $3.7 billion in 2022. Most of the regions markets are open, but with some notable exceptions (Argentina for example). The strength of the US-Latin American market will be a major contributing factor to improvement. Significant restructuring costs as the regions carriers adjust to the new business realities will weigh on financial performance, keeping the region in a collective loss.

Middle Eastern carriers will see very limited improvement in their financial performance from a $6.8 billion loss in 2021 to a $4.6 billion loss in 2022. Without large domestic markets, the regions major carriers rely significantly on connecting traffic, especially to Asia-Pacific which has been slow to re-open to international traffic.

African carriers will see a very slow pace of recovery in financial performance from a $1.9 billion loss in 2021 to a $1.5 billion loss in 2022. Low vaccination rates across the continent are expected to severely dampen demand throughout 2022. The slight improvement is built on the expectation of some recovery in intra-Africa travel and travel to some tourist destination with relatively higher vaccination rates.

See latest Travel Industry News, Video Interviews, Pictures, Podcasts and other news regarding: IATA, AGM, Outlook, Forecast, RPK, ASK, FTK.

Headlines: Minor Hotels Signs Second Anantara Resort in Brazil  Indonesia and Malaysia Named World's Top Two Destinations for Muslim Travellers  IHG Simplifies Hotel Wi-Fi with Auto Connect Solution  Qatar Airways Resumes Flights to Tokyo Haneda  Global Air Traffic at 90.5% of Pre-COVID19 Levels in April 2023  Steve Armitage to Leave BEIA for Hospitality New Zealand  Air Canada Café Opens at Billy Bishop Toronto City Airport  Air Algérie Orders Five A330-900s and Two A350-1000s  IHG Signs Third Kimpton Hotel in Spain  Norse Atlantic Launches London Gatwick - Washington Dulles Flights  Marriott Signs World's Largest Aloft Hotel in Singapore  All Nippon Airways Expands Use of Sabre Slot Manager  IATA Reports Continued Decline in Global Air Cargo Demand  Accor Opens Mantra Hotel in Bunbury, Western Australia  DiDi Enterprise Solutions Partners Amadeus for China Expansion  Yannick Alléno's First Restaurant in London to Open 1 July 2023  World's First All-Inclusive Tivoli Resort Opens in Algarve, Portugal  Upgraded Credit Ratings for Pegasus Airlines  SAS Opens Reservations on Historic First Commercial Electric Flight  Qatar Airways Signs Deal with Shell for 3,000 Metric Tonnes of SAF at AMS  Qantas to Resume Flights to New York, USA in June  Singapore Airlines to Offer Unlimited Free WiFi in All Classes  Plaza Premium Opens First Airport Lounge in Japan  Carlos Rodriguez Appointed Senior Executive Chef of Two Luxury Resorts in Seychelles  Vietnam Airlines Completes SkyTeam's Sustainable Flight Challenge  Munich Airport Breaks Ground on 358-Room ibis Styles Hotel  IHG Breaks Ground on Even Hotel in Doral, Miami  Multi-Modal Cargo Hub to be Constructed at Noida Airport in Uttar Pradesh, India  Norse Opens Ticket Sales on London Gatwick - Miami Flights; Confirms End to FLL Service  Emirates' Complimentary 1 and 2-Night Hotel Stay Promotion Ends 11 June  Starlux Airlines to Launch Flights Between Taipei and Clark, Philippines  Qantas Unveils Details of Group Strategy Through 2030  Asia Pacific Airlines Report 198.9% Increase in RPK  Hyatt Expands Inclusive Collection with Adults-Only Impression by Secrets Brand  Stéphane Gras Returns to USA as GM of Four Seasons Hotel San Francisco  Dusit Opens Second Asai Hotel in Bangkok, Thailand  AirAsia Aiming to Establish Fuzhou Airport as a Gateway Hub for Southeast Asia  Textron Expands Partnership with Absolute Aviation  Boeing Phantom Works Begins Construction of 47,500 sqft ACC in St. Louis, Missouri  Lancashire Cricket Helps Youngsters in UAE Improve Their Game  Garuda Indonesia and Singapore Airlines Explore Joint Venture  Wyndham Signs Two Hotels in Bangkok, Thailand  Norse Atlantic Launches Flights to Orlando and Fort Lauderdale from London Gatwick  Eve Air Mobility to Build First Full-Scale eVTOL Prototype in H2 2023  ITA Airways Takes Delivery of First Airbus A330neo  Dassault Business Jets to Feature Honeywell's Cabin Sentinel  AC Hotel by Marriott Opens in St. Julian's, Malta  Fiji Airways to Increase Flights to Hong Kong  Qantas to Bid Farewell to Boeing 717 VH-NXI Named Blue Mountains  Boeing Signs P-8A Poseidon MOU with ST Engineering  PPHG Opens Two Hotels in Same Skyscraper in Shinjuku, Tokyo, Japan  Holiday Inn Club Vacations Buys Four Royal Resorts in Mexico  Air Corporate Orders 43 Airbus Helicopters  British Airways Begins Phased Rollout of New Uniforms  United Airlines to Expand Services at Denver Hub  Air Canada Adds More Sun to Winter Schedule  Honeywell Partners PT Dirgantara Indonesia on Philippine Air Force NC212i Program  Korean Air Celebrates Earning Lithium Battery CEIV Certification from IATA  Rolls-Royce Expands Business Aviation Solutions with CorporateCare Flex  Embraer Appoints Frederico Lemos as CCO - Defense & Security  Malaysia's SKS Airways to Lease Ten E195-E2s; Signs Services Deal with Embraer  Mandarin Oriental Signs Residential Project in Madrid, Spain  Heekyung Chung Moves to Vietnam as DOSM of Hyatt Regency Danang  Hong Kong Airlines to Launch Flights to Nagoya, Japan  Scoot to Add Nine E190-E2 Aircraft to Fleet  CAE to Open 8,000 sqm Business Aviation Training Centre in Vienna, Austria  Minor Opens Eighth Anantara Hotel in Europe  Marriott Bonvoy Launches Two-Way Points Exchange with FFPs of ANA and JAL  Turkish Airlines Extends Contract for Accelya's Industry Insights Solution  Thai Airways Signs SAF-Related MOU with Bangchak  Mandarin Oriental Signs Hotel and Residences in Athens, Greece  Living With One Eye - Six Years On by Steven Howard  Seoul's Yellow Balloon Tour to Upgrade Services with Sabre Partnership  Solomon Islands Lifts All COVID19-Related Travel Restrictions  Renaissance Hotel Opens in Porto, Portugal  Aruba Certifies ExecuJet MRO Services Malaysia to Maintain Several Aircraft Types  Honeywell Appoints Galaxy Aerospace as an Authorised Avionics Dealer  St. Regis Hotel Opens in Chicago, USA  IndiGo to Expand Domestic Services from the Wine Capital of India, Nashik  Outrigger to Buy Two Hotels in Maui, Hawaii  Cebu Pacific Resumes Laoag - Manila Flights  Marriott Appoints Brian Povinelli as SVP Global Head of Marketing and Brand  Hyatt Signs Second Thompson Hotel in California, USA  Air New Zealand's New Amenity Kits Feature Skincare Inspired by Traditional Maori Practices  Birmingham Airport Partners Smiths Detection for Security Screening Upgrade  Jetstar Takes Delivery of 7th A321neo LR; Changes Check-In and Bag Drop Times  Emirates Expands Free Inflight Connectivity  Doug Parker Joins Qantas Board  Etihad Airways to Launch Flights to Osaka, Japan  Saudia Partners Accenture for Digital Transformation  Sheraton Hotel Opens in Kagoshima, Japan  IndiGo to Expand Kolkata Network; Launch Bangkok Flights in June  Air Canada to Launch Flights Between Toronto and Yellowknife  InterContinental Danang Builds Bridges for Red-Shanked Douc Langurs  Vietnam Airlines Launches Hanoi - Mumbai Flights  Hong Kong Airport Handled 3.1 Million Passengers in April  Korean Air Employees Make a Difference in Chitwan, Nepal  Qatar Airways Signs Codeshare Agreement with Air Seychelles  Boeing Business Jets Sells Two BBJ 787-8s and a BBJ 737-7  Argentina Wins Rugby Sevens Cup Title in London; New Zealand Crowned Champions  IndiGo to Expand Network with New Direct Flights to Middle East  Jagdeep Thakral Moves to Oman as GM of dusitD2 Naseem Resort Jabal Akhdar  Royal Jordanian to Expand Fleet with Eight Embraer E2 Aircraft  Air Canada Installs Air Quality Sensors from IAGOS on an A330  Qantas to Lease Two Finnair A330s  American Airlines Signs 10-Year Use and Lease Agreement with DFW  airasia shop Expands Duty Free Options with Dufry  Songtsam Partners Xiamen Airlines to Promote Tourism to Yunnan, China  Air Astana Celebrates 21st Anniversary; Targets 8.5 Million Passengers in 2023  Elbit Systems to Supply 20 PULS Artillery Rocket Systems to Royal Netherlands Army  India's Aviation Market - Interview with Roshan Mendis, EVP / CCO of Sabre Travel Solutions  Ascott Appoints Two Vice Presidents of Business Development  Minor Hotels Partners Saudi Arabia's Tourism Development Fund  Air Canada Signs Codeshare Agreement with flydubai  IHG Signs MDA with Tashyid for 12 Holiday Inn Express Hotels in Saudi Arabia  Chiva-Som Wellness Resort in Thailand Launches Personalised Supplements Service  Accor Signs New-Build Novotel Hotel in Box Hill, Melbourne  Paris Saint-Germain Football Players Make Dreams Come True at Parc des Princes  Swiss-Belhotel Joins airasia SuperApp's OTA  Hellenic Air Force Takes Delivery of First Two M-346 Training Aircraft  AirAsia Malaysia Launches Flights Between Kuala Lumpur and Kertajati in West Java, Indonesia  Finnair Makes Major Changes to Baggage Restrictions; Launches Superlight Tickets  Plugo to Install EV Charging Stations at Marriott Hotels in Japan  Forward Bookings Show Peak Northern Summer Holiday Season Up 35% on 2022  SITA Reports Increase in Mishandled Baggage  Jewar Airport in Uttar Pradesh, India Signs PPS Agreement with Amadeus  Two Senior Appointments at Mandarin Oriental  India's Star Air Begins Commercial Flights with First E175 Aircraft  Savills Reports Strong Growth in Hotel ADR for Most Cities in Australia  Skyservice Business Aviation Opens FBO at Napa County Airport in California, USA  Hong Kong Rowing Association Celebrates Opening of Major Extension in Sha Tin  Embraer Showcases Short Runway Capability of E190-E2 in South Korea  Cathay Pacific Offering 5,590 Free Tickets to Residents of Bangladesh, India, Nepal and UAE  IHG Signs Two Hotels in Cairo, Egypt  Hong Kong Disneyland Reports Record-High Local Attendance and Annual Pass Membership  China Airlines to Operate First Passenger-Carrying Flight Using SAF  Singapore Festival of Football Attracts Top European Teams  French DGA Tests Airbus VSR700 Unmanned Aerial System at Sea  IHG Opens InterContinental Hotel in Rome, Italy  BP Completes US$1.3 Billion Acquisition of TravelCenters of America  Yotel Signs First Hotel in Thailand  AirAsia Malaysia to Launch Three New Routes to China  China Airlines to Launch Flights Between Kaohsiung and Seoul (Gimpo) in July  MasterCard Publishes Travel Industry Trends 2023 Report  Pictures from Miss International Queen 2022 in Pattaya, Thailand  HD Video Interviews from Miss International Queen 2022 in Pattaya, Thailand  HD Videos and Interviews  Podcasts from HD Video Interviews  RSS Feed - Travel Industry News  Ticker - Travel Industry News  Travel Industry News Archives  Travel Trade Shows  High-Res Picture Galleries  Travel News Asia - Latest Travel Industry News 

Subscribe to our Travel Industry News RSS Feed Travel Industry News RSS Feed from TravelNewsAsia.com. To do that in Outlook, right-click the RSS Feeds folder, select Add a New RSS Feed, enter the URL of our RSS Feed which is: https://www.travelnewsasia.com/travelnews.xml and click Add. The feed can also be used to add the headlines to your website or channel via a customisable applet. Have questions? Please read our Travel News FAQ. Thank you.

     
Advertising
Advertising
Copyright © 1997-2023 TravelNewsAsia.com