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Airline bookings drop as Iata warns of bleak prospects

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on January 13, 2021
(Reuters file photo)

Iata warning comes as repeated calls for a Covid-19 testing regime to replace quarantine requirements have gone unanswered.

Forward airline bookings recorded a sharp drift-off, signalling that the immediate outlook for the airline industry looks challenging following a warning by a global airlines’ body of bleak prospects.

The International Air Transport Association’s (Iata) warning came as its repeated calls for a Covid-19 testing regime to replace quarantine requirements have gone unanswered by governments.

Alexandre de Juniac, Iata director-general, described near-term prospects as “bleak” while his chief economist Brian Pearce warned of more airline bankruptcies during the first half of the year.

During the latest of Iata’s series of conference calls on the effects of the pandemic on airlines, de Juniac reiterated calls to governments for a more balanced approach to reopening borders and urged governments to give up aspirations for a “zero Covid world”.

“That's an impossible task, which comes with severe consequences, the full extent of which it would be impossible to calculate,” said de Juniac. “But with this approach, we know for sure that first, the travel and tourism economy will not recover.”

“The already tepid recovery in air travel demand came to a full stop in November. That’s because governments responded to new outbreaks with even more severe travel restrictions and quarantine measures,” he said.

Pearce, speaking on Tuesday at a media briefing, pointed out that while the industry saw “some modest improvement in bookings in the weeks following the vaccine announcement news” in the fourth quarter of 2020, that trend was reversed towards the end of December and into the first few days of 2021.

“We’ve actually seen quite a sharp drop-off in bookings, which means that the immediate outlook looks pretty challenging,” Pearce said, citing the impact of spiking virus cases and the imposition of further travel restrictions by governments around the world.

Pearce called the near $120 billion loss airlines suffered during 2020 as “catastrophic” if not for the $197 billion in Covid relief to which governments committed during the period. While recounting that airlines that either failed or restructured during the crisis numbered a relatively low “40 or 50,” he warned of a far worse scenario during the first half of the year, particularly among carriers that have not managed to preserve significant levels of cash.

“The next six months, before we see vaccines making a significant difference to travel, is going to be really difficult,” said Pearce.

According to Iata data, bookings for the first quarter of 2021 are down 75 per cent, 82 per cent and 81 per cent year-on-year respectively for January, February and March. Forward bookings at the same point of the fourth quarter of 2020 – which Pearce noted was “already weak” – were down 71 per cent, 81 per cent and 80 per cent year-on-year respectively for October, November and December, the data shows.

De Juniac named Canada, the UK, Germany, and Japan among countries that added testing to Covid-19 measures while maintaining quarantines.

“In other words, they have chosen policy measures that will shut down travel,” added de Juniac. “This approach tells us that these governments are not interested in managing a balanced approach to the risk of Covid-19.

“Science tells us that travelers will not be a significant factor in the community transmission if testing is used effectively, but most governments have tunnel vision,” he said.

issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.





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