Global air transport body predicts 2020 will be worst ever year for commercial aviation

10th June 2020

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

Font size: - +

The International Air Transport Association (Iata), the representative body for the global air transport industry, has released its latest financial forecast for the sector. It expected the world’s airlines to sustain total losses of $84.3-billion this year. This would give a net profit margin of –20.1%. Revenues would be 50% lower than in 2019 – in monetary terms, amounting to $419-billion in comparison to 2019’s $838-billion.

“Financially, 2020 will go down as the worst year in the history of aviation,” affirmed Iata director-general and CEO Alexandre de Juniac. “On average, very day of the year will add $230-million to industry losses. … It means that – based on an estimate of 2.2-billion passengers this year – airlines will lose $37.54 per passenger. That’s why government financial relief was and remains crucial as airlines burn through cash.”

African airlines are expected to suffer a 58.5% drop in passenger demand this year. This would, in percentage terms, be the most severe fall in all the regions. The global average decline was expected to be 54.7%; Latin America would be second worst, with a drop of 57.4%, followed by Europe (down 56.4%), the Middle East (56.1% fall), the Asia-Pacific (53.8% decline) and North America (a drop of 52.6%).

African airlines were likely to see their passenger capacity fall by 50.4% and they were forecast to sustain losses of $2-billion. “The course of the virus in this region is yet to be fully seen,” observed Iata. “Nonetheless, border closures have all but stopped flights. International donors will be needed to supplement the limited means for the region’s governments to provide relief packages.”

Worldwide, while airline costs were also falling their decline was less than the drop in demand. Total airline expenses this year were predicted to come to $517-billion, which would be 34.9% down on those for 2019, but, to reiterate, revenues would fall 50%. As fixed costs would be spread across fewer passengers, non-fuel unit costs would jump by 14.1%. 

However, lower fuel costs would provide some relief. Last year the average price of jet fuel was $77/barrel, but for this year it was forecast to be $36.8/barrel. In 2019, fuel was responsible for 23.7% of overall airline costs; this year, this proportion should be 15%.

And the situation was likely to start improving. “Provided there is not a second and more damaging wave of Covid-19, the worst of the collapse in traffic is likely behind us,” said De Juniac. “A key to the recovery is universal implementation of the re-start measures agreed through the International Civil Aviation Organisation to keep passengers and crew. And, with the help of effective contact tracing, these measures should give governments the confidence to open borders without quarantine measures.” 

He highlighted that restarting international air travel would provide an important economic boost. Some 10% of the world’s gross domestic product was generated by tourism and much of the tourism industry was dependent on air travel.  

Edited by Creamer Media Reporter

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION