With any travel recovery further delayed due to new Covid-19 outbreaks and continued government travel restrictions, the International Air Transport Association now projects that the global airline industry's 2021 revenue to be down 46 percent from 2019 levels due to depressed demand, IATA announced Tuesday. IATA previously forecast a 29 percent revenue decrease in 2021 from 2019.
For full-year 2020, IATA estimates demand as measured in revenue passenger kilometers will decrease 66 percent year over year from 2019, with December demand down 68 percent.
IATA's prior estimate for 2021 was based on expectations of recovery commencing in the fourth quarter of 2020. However, "the fourth quarter of 2020 will be extremely difficult and there is little indication the first half of 2021 will be significantly better, so long as borders remain closed and/or arrival quarantines remain in place," said IATA director general and CEO Alexandre de Juniac in a statement.
IATA renewed calls for additional government funding to shore up airline finances. In response to the demand collapse, airlines have reduced capacity, but cost per available seat kilometer has risen, since there are fewer seat kilometers over which airlines could spread costs, according to IATA. Third-quarter unit costs rose around 40 percent compared with the year-ago period, according to IATA.
"Without additional government financial relief, the median airline has just 8.5 months of cash remaining at current burn rates. And we can't cut costs fast enough to catch up with shrunken revenues," said de Juniac. "For each day that the crisis continues, the potential for job losses and economic devastation grows. Unless governments act fast, some 1.3 million airline jobs are at risk. "
"That would have a domino effect putting 3.5 million additional jobs in the aviation sector in jeopardy along with a total of 46 million people in the broader economy whose jobs are supported by aviation," de Juniac continued.
Looking into 2021, IATA estimates that to achieve a breakeven operating result and neutralize cash burn, unit costs will need to fall by 30 percent year over year. IATA said such a decline is without precedent. "There is little good news on the cost front in 2021. Even if we maximize our cost-cutting, we still won't have a financially sustainable industry in 2021," said de Juniac.