IATA’s latest global airline financial outlook: Demand
The International Air Transport Association (IATA) opened its annual general meeting in Boston and announced its latest outlook for airline industry financial performance showing improved results amid the continuing COVID-19 crisis, one of the key drivers is demand.
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)
- 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%.
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.