The latest passenger figures from the International Air Transport Association (IATA) show that demand remained depressed in September, down 72.8% compared to 2019 levels, on the back of a 63% decline in capacity.
International travel bore the brunt of this decline in demand, down 88.8% compared to September 2019 – not lifting from the 88.5% decline in demand for August. Capacity plummeted 78.9%, and load factor withered 38.2 percentage points to 43.5%.
Domestic demand in September was down 43.3% compared to the previous year, improved from a 50.7% decline in August. Compared to 2019, capacity fell 33.3% and the load factor dropped 12.4 percentage points to 69.9%. This improvement in domestic travel, however, is primarily owing to improvements in China and Russia.
Alexandre de Juniac, IATA’s Director General and CEO, stated that the industry had “hit a wall in [its] recovery”, blaming a resurgence in COVID-19 outbreaks and governments’ reliance on the “blunt instrument of quarantine in the absence of globally aligned testing regimes” for the poor September figures.
Demand is falling around the world, with 80-96% fall in international travel demand the norm for all regions. Europe, with demand down 82.5% versus a year ago, was the only region to see a deterioration in traffic compared to August, owing to renewed infections that led to a wave of border closings
IATA reiterated its warning that airlines aren’t able to slash costs fast enough to compensate for the collapse in passenger demand brought about by COVID-19 and government border closures and quarantines. “Some 4.8 million aviation-sector jobs are imperilled, as are a total of 46 million people in the broader economy whose jobs are supported by aviation,” said de Juniac. “To avoid this economic catastrophe, governments need to align on testing as a way to open borders and enable travel without quarantine; and provide further relief measures to sustain the industry through the dark winter ahead. A broader economic recovery is only possible through the connectivity provided by aviation.”
Meanwhile, to borrow a phrase from Robert Martin in his keynote address to the Airline Economics Growth Frontiers Hong Kong virtual conference earlier this week, the performance of the air freight provides a light in the darkness.
Cargo load factors started to move sharply upwards from March onwards, with dedicated freight carriers showing good profitability.
IATA September data for global air freight markets showing that air cargo demand, measured in cargo tonne-kilometers (CTKs), was 8% below previous-year levels in September (-9.9% for international operations). That is an improvement from the 12.1% year-on-year drop recorded in August. Month-on-month demand grew by 3.7% in September.
Global capacity, measured in available cargo tonne-kilometers (ACTKs), shrank by 25.2% in September ( 28% for international operations) compared to the previous year. That is nearly three times larger than the contraction in demand, indicating a severe lack of capacity in the market.
“Air cargo volumes are down on 2019, but they are a world apart from the extreme difficulties in the passenger business. For air cargo, 92% of the business is still there, whereas about 90% of international passenger traffic has disappeared. Favourable indicators for the peak year-end season will support the continued recovery in demand. Already North American and African carriers are reporting demand gains on 2019. The challenge continues to be on capacity. As carriers adjust schedules to reflect falling passenger demand amid the resurgence of COVID-19, valuable belly capacity will be lost when it is needed the most,” said de Juniac.
Due to the lack of sufficient air cargo capacity caused by limited belly and freighters, more and more airlines are turning to “preighters” – passenger aircraft part-converted to carry freight to generate much-needed revenue. In the newsletter today, Iberia has become the latest airline to operate a preighter aircraft and this trend will likely continue to increase during the fourth quarter – the traditionally busiest period for freight.