The International Air Transport Association forecast Tuesday that the sector will lose $157 billion this year and next due to the pandemic. That’s much worse than previous estimates.
“This crisis is devastating and unrelenting,” IATA Director General Alexandre de Juniac said in a statement.
De Juniac said that Covid-19 made 2020 the worst financial year on record “bar none.” The industry group expects net losses to total $118.5 billion, worse than the $84.3 billion forecast in June. IATA now thinks the airline industry will lose $38.7 billion in 2021, deeper than its previous $15.8 billion forecast.
“We need to get borders safely reopened without quarantine so that people will fly again,” said de Juniac. “With airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose.”
The promise of safe and effective vaccines has fed some optimism that travel can pick up next year. But vaccinating millions of people across borders will take time. “The first half of next year still looks extremely challenging,” IATA said.
Carrying freight is the only bright spot in the industry, with cargo revenues expected to increase 15% from 2019 to $117.7 billion, according to IATA. About 50% of all air cargo is moved in the bellies of passenger aircraft, so a steep drop in the number of planes flying caused cargo rates to spike.
While cargo won’t replace the precipitous drop in air passenger revenue, it has helped airlines to “sustain their skeleton international networks,” de Juniac said.
Passenger numbers are expected to grow to 2.8 billion in 2021, but won’t return to the 4.5 billion reached last year until 2024 at the earliest, with domestic markets expected to recover faster than international services, IATA said.
— Rob North contributed reporting.