The financial performance of the global airline industry will continue to show improvement in the coming year, even as the COVID-19 crisis drags on. According to the latest outlook from the International Air Transport Association, the industry is expected to further trim its losses against rising demand for both passenger traffic and air cargo.
In the year ahead, IATA predicts:
- The global aviation industry will post a net loss of $11.6 billion, compared to a $51.8 billion loss in 2021.
- Demand is expected to rise to 61 percent of pre-pandemic levels in 2022, versus 40 percent in 2021.
- Total passenger numbers are expected to grow to 3.4 billion in 2022, compared to 2.3 billion in 2021.
- Robust demand for air cargo is expected to continue with 2021 demand at 7.9 percent above 2019 levels, growing to 13.2 percent above 2019 levels for 2022.
The IATA forecast follows the association’s announcement in August that 2020 was the worst year ever for global air travel. Still even from that gloomy outlook, estimates of net losses in 2020 have been revised downward to reflect slower recovery, from $126.4 billion forecast in April to the current projection of $137.7 billion.
Together with the $63 billion-plus projected for this year and next, IATA says total industry losses from 2020-2022 are expected to reach $201 billion. And while passenger counts are rising, next year’s number of 3.4 billion is still well below the 4.5 billion travelers the industry carried in 2019.
Domestic Travel Shines
Since most countries are imposing fewer restrictions internally, domestic demand is driving the current recovery. The IATA analysis shows 2021 domestic demand is expected to reach 73 percent of pre-crisis levels, and in 2022 is expected to rise to 93 percent of pre-pandemic levels.
International Travel Lags
International demand is the slowest to recover thanks to ongoing restrictions on cross border travel, quarantine measures and traveler uncertainty. International demand in 2021 is expected to languish at 22 percent of 2019 levels, rising to 44 percent of pre-crisis levels in 2022.
Regionally, the strongest performer will be North America on the back of fast recovery of the US domestic market. Carriers are expected to outperform other regions trimming losses in 2021 to $5.5 billion and turning a $9.9 billion profit in 2022. All other regions will trim 2022 losses compared to 2021.
European carriers will better than halve their losses, from $20.9 billion in 2021 to $9.2 billion in 2022. However shifting rules and confused implementation of the European Digital Covid Certificate will still be a drag on long-haul international traffic compared to intra-European travel.
Asia-Pacific markets continue to see some of the most draconian travel restrictions holding back recovery in international markets. However carriers are expected to see losses diminish from $11.2 billion in 2021 to $2.4 billion in 2022, largely due dominate cargo demand and open domestic markets, not least of which is China.
In the rest of the world, IATA predicts carriers in Latin America, the Middle East and the African continent will continue to cut net losses, although profitability is still some time off.
“The magnitude of the COVID-19 crisis for airlines is enormous,” commented Willie Walsh, IATA’s director general. “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.”
Walsh criticized the lack of progress among government to standardize travel rules. “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,” he said.