There will be a projected loss of $84.3-billion for global airlines in 2020. This is according to the global aviation association, the International Air Transport Association (IATA).
The losses are due to travel bans and visa restrictions around the world because of the Covid-19 pandemic.
This has caused a sharp fall in demand and revenue. It has also forced airlines to halve international passenger traffic or to slash costs.
In some countries, governments are stepping in to infuse funds and keep airlines afloat.
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Financially, 2020 will go down as the worst year in the history of aviation, IATA’s Director General Alexandre de Juniac said.
He said this as he released the financial outlook for the air transport sector on Tuesday. Based on passenger estimates, airlines will lose $37.54 per passenger, it said.
IATA said passenger demand has evaporated as international borders closed and countries locked down. This was done to prevent the spread of the virus. This is the biggest driver of industry losses, it said.
At the low point in April, global air travel was roughly 95 per cent below 2019 levels. The global airline body said passenger numbers will roughly halve to 2.25 billion, approximately equal to 2006 levels.
Capacity, however, cannot be adjusted quickly enough with a 40.4 per cent decline expected for the year.
According to IATA, passenger revenues are expected to fall to $241 billion (down from $612 billion in 2019). “This is greater than the fall in demand, reflecting an expected 18 per cent fall in passenger yields as airlines try to encourage people to fly again through price stimulation,”.
With open borders and rising demand in 2021, the industry is expected to cut its losses to $15.8 billion.
“Airlines will still be financially fragile in 2021. Passenger revenues will be more than one-third smaller than in 2019. And airlines are expected to lose about $5 for every passenger carried. The cut in losses will come from reopened borders leading to increased volumes of travellers.
Strong cargo operations and comparatively low fuel prices will also give the industry a boost. Competition among airlines will no doubt be even more intense. That will translate into strong incentives for travellers to take to the skies again,” said de Juniac.