The International Air Transport Association (IATA) estimates that the global airline industry could suffer losses of as much as $84 billion this year as a direct result of the disruptions caused by the coronavirus pandemic. The international trade association stated that global airline revenues could be reduced by more than half, making 2020 the worst year in the industry's history.
The IATA, which published its forecast on Tuesday, pointed out that most of the fleets of global airlines remain grounded as demand for air travel has still not yet recovered. It added that global airline revenues will likely be around the $419 billion range this year, a drastic drop from the $838 billion reported last year.
The association's director-general, Alexandre de Juniac, mentioned in the report that the disruptions caused by the pandemic has cost the industry an average of $230 million in cumulative losses per day. This translates to about a $38 loss per passenger that will fly this year.
The IATA's forecast for the coming year also remains bleak as it does not expect the industry to recover to pre-pandemic levels anytime soon. In its forecast, the association estimates that the industry could hit losses of up to $100 billion in 2021, as most airlines continue to struggle to survive. Most airlines will likely be forced to slash airfares in order to attract more travelers, resulting in added losses.
De Juniac stated that global airlines will remain financially fragile throughout the rest of the year and the next, with most aggressively fighting to regain their market share in the low-demand market. While this may be bad news for airlines, the situation could prove advantageous for consumers.
The IATA predicts that global airline revenues will slightly recover to around $598 billion in 2021. However, added costs involving debt payments for bailouts and other related expenditures could drive down profits and increase losses. Airlines will also likely be facing added losses as they adapt to new social distancing guidelines and quarantine protocols. Despite the recent slowdown of new COVID-19 cases, some consumers are still wary of traveling abroad, particularly on airlines that have yet to implement necessary safety precautions.
In its forecast, the IATA revealed stated that passenger numbers for 2020 could fall to around 2.25 billion this year, a 25 percent drop from the volumes recorded last year. Meanwhile, air cargo, which represents only a small portion of the overall industry, has managed to somewhat offset some of the losses. The mass grounding of planes and the demand for air cargo has resulted in a price increase of over 30 percent, providing relief to some operators.
