IATA calls for passenger confidence boost measures in face of slow recovery

The International Air Transport Association (IATA) has called on governments across the globe to work with the aviation industry on confidence-boosting measures in the face of an anticipated slow recovery in demand for air travel following the COVID-19 pandemic.

IATA’s Director General and CEO, Alexandre de Juniac, said: “Passenger confidence will suffer a double whammy, even after the pandemic is contained – hit by personal economic concerns in the face of a looming recession on top of lingering concerns about the safety of travel. Governments and the industry must be quick and coordinated with confidence-boosting measures.”

In a survey of recent travellers commissioned by IATA, it was found that 60 per cent of travellers anticipate a return to travel within one to two months of containment of the COVID-19 pandemic, but 40 per cent indicate that they may wait six months or more. In addition, 69 per cent indicated that they may delay a return to travel until their personal financial situation stabilises.

Early indications of this cautious return-to-travel behaviour are seen in the domestic markets of China and Australia, where new COVID-19 infection rates have fallen to very low levels.

China

Domestic demand began to recover when the rate of new COVID-19 infections in China fell into single digits and rapidly headed towards zero (measured by new infections as a percentage of the seven-day moving average of total COVID-19 cases).

While there was an early upswing from mid-February 2020 into the first week of March 2020, the number of domestic flights plateaued at just over 40 per cent of pre-COVID-19 levels. Actual demand is expected to be significantly weaker as load factors on these flights are reported to be low. China accounts for some 24 per cent of all domestic passengers.

Australia

Domestic demand continued to deteriorate even after the rate of new infections fell into single digits, which triggered an initial recovery in the Chinese domestic market. There is currently still no sign of a recovery (total domestic flights are at 10 per cent of pre-COVID-19 levels) even as new infections nears zero. Australia accounts for three per cent of all domestic travellers.

Domestic market behaviour is a critical indicator, as the post-pandemic recovery is expected to be led by domestic travel, followed by regional and then intercontinental travel as governments progressively remove social distance and travel restrictions, as well as border closures.

de Juniac continued: “In some economies, the spread of COVID-19 has slowed to the point where governments are planning to lift the most severe elements of social distancing restrictions. But an immediate rebound from the catastrophic fall in passenger demand appears unlikely. People still want to travel, but they are telling us that they want clarity on the economic situation and will likely wait for at least a few months after any ‘all clear’ before returning to the skies. As countries lift restrictions, confidence boosting measures will be critical to re-start travel and stimulate economies.

“The passenger business came to a halt with unilateral government actions to stop the spread of the virus. The industry re-start, however, must be built with trust and collaboration. It must be guided by the best science we have available. Time is of the essence. We must start building a framework for a global approach that will give people the confidence that they need to travel once again. Of course, this will need to be shored-up by economic stimulus measures to combat the impact of a recession,” added de Juniac.

Relief and recovery measures

In addition to confidence-building and stimulus measures, the anticipated slow recovery also adds urgency to the need for emergency financial relief measures. IATA estimates that approximately 25 million jobs in aviation and its related value-chains – including the tourism sector – are at risk in the current crisis. Passenger revenues are expected to be $314 billion below 2019 ( a fall of 55 per cent) and airlines will burn through roughly $61 billion in liquidity in the second quarter alone as demand plummets by 80 per cent or more.

de Juniac said: “This is an emergency. Airlines around the world are struggling to survive. Virgin Australia, which entered voluntary administration, demonstrates that this risk is not theoretical. Governments will need financially viable airlines to lead the economic recovery. Many of them won’t be around to do that if they have run out of cash. The number of governments recognising that relief measures are needed is growing. But the crisis is also deepening. We thank the governments that have committed to provide the industry a lifeline and look forward to quick implementation. For the others, each day matters. Millions of jobs are at stake and relief cannot come fast enough.”