Global passenger traffic to a slow road of recovery

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Airlines to a slow recovery

“Global passenger traffic will not return to pre-COVID-19 levels until 2024, a year later than previously projected.” is the verdict by the The International Air Transport Association (IATA) released in late July and still holding. “Global passenger forecast showing that the recovery in traffic has been slower than had been expected.”

IATA further predicts that the domestic travel recovery to pre-COVID levels will happen faster and sooner then the long haul, transcontinental travel and it moves from year 2022 to year late in 2023.

In the beginning of the pandemic many airlines placed great hopes into the 2020 summer travel season to slow the rapid rate of their losses. They hoped more people would chose to travel in the summer with the possibility of easing border travel restrictions. However, as the summer season has passed only a slight improvement was achieved.

“June 2020 passenger traffic foreshadowed the slower-than-expected recovery. Traffic, measures in revenue passenger kilometers (RPKs), fell 86.5% compared to the year-ago period [and] slightly improved from a 91.0% contraction in May. This was driven by rising demand in domestic markets, particularly in China.” says the IATA report.

The revenue passenger kilometers (RPKs) measures the traffic for an airline flight. It is calculated by multiplying the number of revenue-paying passengers aboard the plane by the distance traveled.

There are several contributing factor that lead to the slow demand in passenger traffic. The fist and most important is the lost traveler’s confidence. The employment uncertainty and the rising unemployment levels in many countries in Europe, the US, and around the world combined with the fear of being infected by COVID-19 still keeps travelers away from airports. It strongly discourages them to travel. Of course, visiting friends or relatives may be the only driving force behind some travel happening.

The lack of vaccine and the possible health and social consequences of coming down with a coronavirus infection is enough to scare people to travel.

The lack of corporate travel is another, major contributing factor to a slow recovery. Employers may be under financial pressure, or moved their staff partially or completely to work remotely has dried up the pipes of corporate business for the airlines.

Frequent travelers are mostly corporate travels. They fly often, use premium services occasionally, and keep on traveling even when general travel is slow. It provides for a steady revenue for airlines.

However, as a result of the pandemic many companies moved their staff to work from home. Some companies even established permanent remote positions. As meetings happen online employees don’t have to travel on business. This is already a major blow to the airlines bottom line.

The recent flares of coronavirus in countries in Europe, the US, and Asia is the third contributing factor to a slow recovery in the industry. For example in China – the main reason for the world coronavirus pandemic – the virus has never stopped and continues to spread. The most recent outbreaks in the UK, Germany, Israel, and in some states in the U.S. put a stop to any hope of travel recovery.

To reduce their financial losses airlines sought help from their respective governments. They’ve also parked a signification portion of their fleet and especially wide body jets as international travel is still at records low. Around the world planes were only 38.9% full on international flights which is far from levels airlines can turn a profit on these flights.

A friend of mine traveled from San Francisco, California to Munich, Germany on Lufthansa at the beginning of August and returned to the U.S. a month later. He commented that the international flights were simply empty.

“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak. What improvement we have seen has been domestic flying. International markets remain largely closed. Consumer confidence is depressed and not helped by the UK’s weekend decision to impose a blanket quarantine on all travelers returning from Spain. And in many parts of the world infections are still rising. All of this points to a longer recovery period and more pain for the industry and the global economy,” said Alexandre de Juniac, IATA’s Director General and CEO in a July 28 statement.

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Ian Powers is a travel blogger and nature enthusiast. Ian has over 20 years of aviation travel experience.

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