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Inter-continental flights unlikely before Q4: Iata

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on June 11, 2020

(Photo by M. Sajjad)

Air passengers will have to wait till the end of the year to fly between continents while short-haul commercial flights will likely be possible by this summer, the head of the International Air Transport Association said on Thursday, two days after giving a grim forecast that 2020 goes down as the "worst year in the history of aviation'' with record annual losses of $84 billion.

Alexandre de Juniac, director general of the Iata - the trade association representing 290 airlines and 82 per cent of global air traffic - said over the past two weeks, the hopes of a recovery for the airlines industry have been rising with several countries relaxing curbs of domestic and charter flights.

"Four weeks ago, the sector was in a complete disaster, with a very pessimistic outlook and a very pessimistic vision of the future.  However for the past week or two, some optimism had trickled back into the industry - particularly in Europe and the US - as countries and states began to reopen their economies," de Juniac told CNBC in an interview.

With some European and American airlines now planning to increase capacity more than expected, short-haul flights are likely to be possible this summer, but "for intercontinental flights you should, I think, wait for the fourth quarter."

In an updated forecast, Iata has predicted that airline passenger traffic is expected to rise 55 per cent in 2021 from its depressed level this year, while still remaining 29 per cent below its 2019 level.

Notwithstanding an increasingly optimistic outlook from the industry and rising demand for flight bookings, the Iata's report paints a gloomy outlook for airlines as the uncertainty over the end of the pandemic-entailed lockdown persisted along with the non-availability of a vaccine before the year end.

The new financial outlook for the global air transport industry published on Tuesday said airlines were expected to lose $84.3 billion this year. "Financially, 2020 will go down as the worst year in the history of aviation," de Juniac said in the report. "On average, every day of this year will add $230 million to industry losses."

According to the report, revenues across the industry were predicted to fall by 50 per cent to $419 billion in 2020, down from $838 billion in 2019.

With revenues for next year expected to reach $598 billion, the IATA said it expected losses to decrease to $15.8 billion in 2021, extending the total losses to about $100 billion largely attributable to the pandemic  as recovering traffic remains well short of pre-crisis levels, and airlines slash fares to win business.

"By comparison, airlines lost $31 billion with the Global Financial Crisis and oil price spike in 2008 and 2009. There is no comparison for the dimension of this crisis."

According to Iata, and other global aviation bodies as well as leading airlines, the airline industry, which supports 65.5 million jobs around the world, including 10.5 million people employed at airports and by airlines, and contributes $2.7 trillion in world economic activity, will take three years to return to operational levels seen just before the Covid-19 pandemic broke out.

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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