Aviation sector outlook remains on the downside

Unlikely to fully recover before 2024-2025

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2020 saw the sharpest traffic decline in aviation history. The pandemic led to travel bans, and subsequently, airline volumes collapsed. So far, the 2020 hangover is still weighing on the industry.

The outlook in the near term remains gloomy as travel bans and operational restrictions are still effective across most parts of the globe in face of the ongoing coronavirus (COVID-19) pandemic.

The International Air Transport Association (IATA) in its report released on Wednesday noted that international air passenger demand plunged 88.7% in February this year compared to the pre-COVID levels of February 2019, which is also a further drop from the 85.7% year-to-year decline recorded in January.

According to IATA, that’s the “worst growth outcome” since July 2020. Performance in all regions worsened compared to January 2021.

“February showed no indication of a recovery in demand for international air travel. In fact, most indicators went in the wrong direction as travel restrictions tightened in the face of continuing concerns over new coronavirus variants,” said Willie Walsh, IATA’s Director General.

The pandemic is testing the airlines for far longer with the sector unlikely to fully recover before 2024-2025. Betting on back to normalcy this year seems a wrong choice, but the roll-out of vaccines is expected to help the sector boost operations particularly in the second half of 2021.

Low-cost and continental airlines are expected to lead the recovery.

According to IATA, total demand for air travel in February 2021 (measured in revenue passenger kilometers) was down 74.7% compared to February 2019. That was worse than the 72.2% decline recorded in January 2021 versus two years ago.

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