The annus horribilis for airlines begins to rise very slowly

Vaccination campaigns to try to mitigate and eradicate the effects of the COVID-19 pandemic are the great hope of the global air transport industry, which in 2020 has experienced the greatest crisis in its history. 

Restricted freedom of movement in 221 countries –practically all over the world– has caused world tourism to collapse, global air traffic to plummet, airports to work far below their capacity, airline revenues to plummet, large parts of aircraft fleets to be grounded and most of their staff to be out of work waiting for better times.

Such is the situation with which he concluded last year that the Executive Director General of the International Air Transport Association (IATA), Alexandre de Juniac said that "nobody is nostalgic for 2020. If ever there was an annus horribilis for aviation, it was 2020".

With vaccination campaigns underway in many countries, expectations for 2021 are optimistic but not much better than 2020. From Alexandre de Juniac's point of view, the recovery process "will be long" and "will take years to come". According to IATA forecasts, a return to the level of air traffic in 2019 will be a long and tortuous road and will not occur "until the middle of this decade".

The latest reports from the employers' association confirm that 2020 has ended with an overall fall in passenger traffic "of 66.3% compared to 2019", a brutal fall due to the restrictions imposed on travel, the closure of borders, quarantine measures and fears of contagion in planes.

The COVID-19 crisis has led to an unprecedented economic and social deterioration. On a global scale, it means no less than the potential disappearance of 46 million jobs in travel and tourism companies. The airlines alone have accumulated total net losses "of close to 118.5 billion dollars", a figure on which IATA and ICAO, the International Civil Aviation Organisation, the specialised agency of the UN, agree. This is the result of having carried out 16.4 million flights in 2020 compared to 38.9 million in 2019, a spectacular collapse.

The year 2021 will still bring significant losses for airlines, which both international organisations have estimated at "some 38 billion dollars", but the negative impact will be different in different geographical regions. In old Europe, for example, the latest IATA report confirms that COVID-19 has had a "massive" impact on its airlines, whose return to business will be favoured by the importance of international flights. But it will still be "gradual" because of a "slow economic recovery", says the Association.

For 2021, the employers' forecast is that net losses will be around 11.9 billion. As a result, airlines have postponed the purchase of new aircraft and accelerated the withdrawal of their older and less efficient ones, including the veteran Boeing 747 Jumbo and even some of the newer Airbus A380s.

In contrast, 2020 has closed with 5 million flights (11.1 million in 2019) and 70% fewer passengers (1.7 billion drop compared to 2019), which according to Eurocontrol –the European Organisation for the Safety of Air Navigation– has led to 56.2 billion euros in net losses for airlines, airports and air traffic managers.

At the end of the year just ended, 51% of the European fleet - no less than 4,118 aircraft out of a total of 8,048 - was parked at different airports on the old continent and at other latitudes. The list of mass parking facilities in Europe is headed by the airports of Madrid-Barajas, Istanbul and Teruel.

An example of the brutal fall in airport activity is London. Considered the best connected city in the world, the pandemic has caused it to "lose 67% of its connectivity. Today, the capital of the United Kingdom is in eighth position in the world," Alexandre de Juniac stressed to the directors of British aviation, an economic fabric from which 850,000 jobs have disappeared or are at risk. 1.3 million flights have been eliminated at the islands' airports (61%).

By contrast, North American airlines will enjoy a "rapid upward curve compared to other regions" by 2021, predicts IATA, because their large domestic markets will drive the improvement, but only if the pandemic is successfully stopped. It should not be forgotten that the American airlines were the ones with the highest volume of traffic before the crisis, and their fall in passengers was 66%, causing them net losses of 45.8 billion dollars. 

Asia-Pacific was the first region to begin to recover. China and India are already benefiting from the progressive rise of their large domestic markets, which has been helped by the demand stimulus implemented by their airlines, which are in the process of reducing fares. However, net losses in the current year are at the $7.5 billion threshold, well below the $31.7 billion evaporated in 2020 by a 62% drop in traffic.

On the contrary, the deterioration that the airlines of the Middle East have been suffering will continue and recovery will be delayed throughout the present and the coming years. The main reasons given by IATA are the "lack of large domestic markets and their heavy dependence on international flight connections". The COVID-19 was driven by the airlines of the region, as some of them were immersed in a process of restructuring and cutting the number of routes, all of which reduced their turnover by 73% and has generated $7.1 billion in red.

The impact of the pandemic on Ibero-America and Africa has been exacerbated by the difficult economic context of both regions. In South America, demand has fallen by 64 percent, representing net losses of $5 billion. The number of passengers in Africa has fallen by 72 percent, representing a drop of two billion. The foreseeable improvement by 2021 will be slow and will result in net losses of nearly $3.3 billion in South America, slightly less than $1 billion in Africa.