New restrictions on international border crossings, combined with faltering COVID-19 immunization efforts, dashed hopes of a significant recovery in air travel in 2021.
Why it matters: For global aviation, which suffered its worst year in history in 2020, the misery must continue, preventing a broader economic recovery.
- Predictions that air travel would recover 50% from pre-pandemic levels in 2021 now seem overblown, industry officials warn.
- “There is a recovery, but it is a much smaller recovery,” Brian Pearce, chief economist at the International Air Transport Association, told reporters this week.
- “What we’ve seen in the past few weeks has been governments taking a much, much more rigid and cautious approach.”
- Its worst case scenario: air travel in 2021 is only 38% of 2019 levels.
The big picture: The world is more closed today than at any time in the past 12 months.
- New, potentially more contagious strains of the coronavirus have generated renewed limits on international travel and a dizzying series of quarantine restrictions.
- Although the arrival of new vaccines is good news for air travel, the slow deployment means that collective immunity is still a long way off.
A sinister sign: Reservations for future travel decreased significantly in January, IATA said.
- “Things are going to get a lot harder before it gets better,” warns aviation consultant Shashank Nigam, CEO of Simpliflying.
- Even countries that are vaccinating quickly will keep their borders closed for some time, he predicts.
- Israel, for example, leads the world with 20% of the population fully vaccinated, but imposed a ban on international travel last week to combat the increase in cases of a rapidly spreading UK variant.
- And regional travel bubbles, like those between Hong Kong and Singapore or Australia and New Zealand, did not last.
Context: The recovery that started last summer stopped in the fourth quarter, as coronavirus cases increased worldwide.
- Air travel fell by 70% in October, November and December compared to the previous year’s levels.
- Throughout 2020, passenger demand fell by 66%. International passenger demand fell by 75%; domestic demand almost in half.
- Americans who flew were looking for sun and beaches: trips to places like Mexico and the United States Virgin Islands fell less in December, according to Airlines for America.
- One positive point: air cargo dropped just 10% last year, helping to keep many airlines afloat.
What they are saying: “Last year was a catastrophe. There is no other way to describe it,” said Alexandre de Juniac, IATA director general and CEO, in a statement.
- “I don’t think anyone is predicting a COVID-19-free world anytime soon. Certainly not in the coming months or even this year. But our ability to manage risk is increasing as more people are vaccinated and the capacity for testing increases. ”
Airlines say testing is widespread, not border restrictions, will allow international air travel to resume safely.
- The Nigam company is launching a service called Fit2Fly.travel that connects airlines and test labs so that passengers can schedule a COVID-19 test as part of the booking process.
- New smartphone apps, like IATA’s CommonPass and Travel Pass, can help validate passengers’ health so governments can safely reopen borders.
Yes but: When it comes to domestic flights, U.S. airlines are asking the Biden government not to require testing before departure, saying it would limit travel access to low-income and rural communities.
What to watch: For airlines, the outlook for the next one or two years is uncertain and will depend on how effectively vaccines and tests can prevent the spread of new variants.
The end result: Aviation is unlikely to return to pre-pandemic levels until 2023 or 2024.