In the Economics’ Chart of the Week (17 April 2020) IATA updates the COVID-19 impact assessment on air travel.
In the new scenarios, IATA still assumes a three month ‘lock-down’ of the global air travel market but incorporates recent data for Africa and Latin America which shows that the closures have been extended into Q2 and are approaching the point of complete lock-down, akin to that in Europe.
April 17, 2020 chart shows air travel industry wide RPK growth expectations (solid blue line) based on the revised economic growth and capacity assumptions. In Q3, some limited opening of international markets and the release of pent up demand in domestic markets is expected to offset the recession impact. Recovery continues in Q4, but international RPKs are still only expected to have recovered 50% of their initial decline by this time. To provide some additional insight, the dotted pink line shows the impact of the recession alone on RPK growth; i.e. without border closures, the recession alone would cause ~10% fall in RPKs.
Given the assumptions above, IATA estimates that RPKs will decline by 48% in year-on year terms and passenger revenues will be $314 billion lower this year compared to 2019. As IATA noted previously the typical airline has cash to cover around two months of revenue loss. Hence, managing costs in order to cover this unprecedented loss in revenues will continue to be the main concern of the airline industry in 2020.
IATA Economics – Return to air travel expected to be slow
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