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Covid variants, travel curbs threaten airline recovery: Iata

February 4, 2021

Global airlines are bracing for a slower recovery as governments respond to new Covid-19 variants with more travel curbs.

The emergence of new, more transmissible variants of the coronavirus were hurting the prospects for recovery in 2021, the International Air Transport Association warned on Wednesday as global air passenger traffic recorded an unprecedented 66 per cent plunge in 2020.

“Global airlines are bracing for a slower recovery as governments respond to new Covid-19 variants with more travel curbs,” Iata warned.

New restrictions now pose a “downside risk” to Iata’s predicted return to 50 per cent of pre-crisis passenger traffic levels in 2021, Director General Alexandre de Juniac said.

The clampdown “could make even that modest outlook very challenging”, de Juniac said. Iata said global passenger traffic fell 66 per cent and cargo demand by 10.6 per cent in full-year 2020.

Iata said travel restrictions imposed during the first wave of the pandemic saw global passenger traffic falling to just five per cent of its normal level, with airlines forced to park planes on runways because not enough space was available.

Given that travel restrictions applied mostly to international travel, domestic passenger traffic fared better, dropping by 49 per cent, compared to 76 per cent for foreign passenger traffic, it said.

While traffic picked up during the summer, in December it was down by 70 per cent, thus finishing out the year below average.

Iata, which is a body of 190 airlines, did not formally lower its outlook for a pick-up in traffic this year thanks to the rollout of vaccines, but warned the emergence of new coronavirus darkened the outlook.

Recently, Iata said forward airline bookings recorded a sharp drift-off, signalling that the immediate outlook for the airline industry looked challenging.

Iata’s recent repeated call for Covid-19 testing regime to replace quarantine requirements have gone unanswered by governments.

In a recent address, de Juniac, who has been reiterating calls to governments for a more balanced approach to reopening borders, also urged governments to give up aspirations for a “zero Covid world”.

He described near-term prospects as “bleak” while his chief economist Brian Pearce warned of more airline bankruptcies during the first half of the year.

Pearce has pointed out that while the industry saw “some modest improvement in bookings in the weeks following the vaccine announcement news” in the fourth quarter of 2020, that trend was reversed towards the end of December and into the first few days of 2021.

“We’ve actually seen quite a sharp drop-off in bookings, which means that the immediate outlook looks pretty challenging,” Pearce said, citing the impact of spiking virus cases and the imposition of further travel restrictions by governments around the world.

Pearce called the near $120 billion loss airlines suffered during 2020 as “catastrophic” if not for the $197 billion in Covid relief to which governments committed during the period. While recounting that airlines that either failed or restructured during the crisis numbered a relatively low “40 or 50,” he warned of a far worse scenario during the first half of 2021 particularly among carriers that have not managed to preserve significant levels of cash.

According to Iata data, bookings for the first quarter of 2021 are down 75 per cent, 82 per cent and 81 per cent year-on-year respectively for January, February and March. Forward bookings at the same point of the fourth quarter of 2020 – which Pearce noted was “already weak” – were down 71 per cent, 81 per cent and 80 per cent year-on-year respectively for October, November and December, the data shows.