Home Business NewsBusinessAviation News Will the aviation sector fully take-off in 2021?

Will the aviation sector fully take-off in 2021?

by LLB Finance Reporter
10th Mar 21 11:00 am

2020 was the worst year in the more than 100-year history of aviation, as planes all over the world were grounded and people confined to their homes due to the coronavirus pandemic.

Across the globe, passenger demand plummeted by 75.6% compared to the previous year, according to industry body IATA. Many airlines turned to governments for massive financial aid, while others were forced to drastically reduce their route networks and teetered on the brink of bankruptcy. Total losses during the year were estimated by IATA at around $84 billion, although it said they could be as high as $118.5 billion.

The only slightly bright spot during the calamity of 2020 was that while air cargo demand dropped by just over 10%, load factors — the amount of cargo per flight — increased by almost 8%. This, however, was due to drastically reduced capacity, given there were far fewer planes flying. Still, some associated sectors and their products that service the airline industry — like the ball transfer units used in loading cargo onto and off aircraft — have enjoyed steady business, according to leading manufacturers like Omnitrack.

Continued threat to global aviation

Now, as some see a recovery in the airline industry, others are pointing to the slew of coronavirus variants that have emerged and could threaten to dampen passenger demand for flights for most of the year. Some countries, like the United Kingdom, are still in lockdown. Measures, including those that make most travel illegal, are not expected to be lifted until some time in June — depending on all going well with vaccination rollouts and a lowering of infection rates.

IATA has forecast losses in the aviation sector at around $38.7 billion in 2021 and has been urging airlines to use digital health passports containing COVID-19 tests and vaccinations as the way towards a full recovery. British Airways is the latest airline to announce it will test the solution using the VeriFLY app.

“The trial is part of the airline’s ongoing work to explore digital health travel wallet and document verification solutions, which help customers and support the government in ensuring conformance with the UK’s entry requirements,” British Airways said.

A long haul to recovery

Getting lots more planes in the sky, packed full of passengers, will depend on how quickly countries lift their travel-killing quarantine requirements, according to IATA chief Alexandre de Juniac.

“This crisis is devastating and unrelenting. Airlines have cut costs by 45.8%, but revenues are down 60.9%. The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion,” he said.

While losses would be reduced compared to last year, bleeding $38.7 billion into the red in 2021 was “nothing to celebrate,“ the IATA chief said.

“We need to get borders safely reopened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021, there is no time to lose.”

A rush to get away

If there is a sliver of good news in this continually bleak — if not dismal — airline-industry picture, it’s that demand is there, and growing by the day, as frustrated travellers who have not left their countries for months, if not over a year, seek to once again roam free.

This demand was evidenced in a rush in airline bookings in late February — soaring by as much as 600% with the UK’s easyJet — when Britain announced a roadmap out of lockdown and a gradual easing of restrictions.

“We have consistently seen that there is pent-up demand for travel, and this surge in bookings shows that this signal from the government that it plans to reopen travel has been what UK consumers have been waiting for,” easyJet boss Johan Lundgren said in comments that will bring hope for the entire industry.

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