• ITVI.USA
    15,535.570
    47.840
    0.3%
  • OTRI.USA
    24.760
    -0.540
    -2.1%
  • OTVI.USA
    15,494.220
    48.160
    0.3%
  • TLT.USA
    2.720
    0.000
    0%
  • TSTOPVRPM.ATLPHL
    2.500
    -0.050
    -2%
  • TSTOPVRPM.CHIATL
    3.080
    0.050
    1.7%
  • TSTOPVRPM.DALLAX
    1.370
    -0.080
    -5.5%
  • TSTOPVRPM.LAXDAL
    2.950
    0.040
    1.4%
  • TSTOPVRPM.PHLCHI
    1.690
    -0.010
    -0.6%
  • TSTOPVRPM.LAXSEA
    3.130
    0.110
    3.6%
  • WAIT.USA
    120.000
    0.000
    0%
  • ITVI.USA
    15,535.570
    47.840
    0.3%
  • OTRI.USA
    24.760
    -0.540
    -2.1%
  • OTVI.USA
    15,494.220
    48.160
    0.3%
  • TLT.USA
    2.720
    0.000
    0%
  • TSTOPVRPM.ATLPHL
    2.500
    -0.050
    -2%
  • TSTOPVRPM.CHIATL
    3.080
    0.050
    1.7%
  • TSTOPVRPM.DALLAX
    1.370
    -0.080
    -5.5%
  • TSTOPVRPM.LAXDAL
    2.950
    0.040
    1.4%
  • TSTOPVRPM.PHLCHI
    1.690
    -0.010
    -0.6%
  • TSTOPVRPM.LAXSEA
    3.130
    0.110
    3.6%
  • WAIT.USA
    120.000
    0.000
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Air CargoAmerican ShipperNews

IATA outlook for airline industry recovery slides to 2024

Air cargo volume ticks up in June, but loses market share to ocean

The International Air Transport Association on Tuesday pushed back by a year its estimate for the airline industry to fully recover from the novel coronavirus and said the air cargo market’s modest improvement in June still lagged growth in manufacturing output and trade.

The airline group downgraded its forecast for global passenger traffic and revenues, saying it will not return to last year’s levels until 2024 because a COVID-19 resurgence in several countries, depressed corporate travel and weak consumer confidence is slowing growth more than expected.

A slower passenger recovery means fewer aircraft in the air that can also carry cargo – and higher rates or transport delays for shippers – especially on freight-heavy international routes.

Belly capacity for international air cargo shrank 70% in June compared to 2019 because airlines were still grounding most fleets. A 32% increase in available freighter space could not fill the void, leaving the global market with 34% less overall capacity – the same as in May, according to IATA data. Even though airlines resumed limited international passenger routes they also stopped using some cargo-only jets that became uneconomical to operate at lower rates. 

“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak. What improvement we have seen has been domestic flying. International markets remain largely closed,” said IATA Director General Alexandre de Juniac in a statement. “Domestic traffic improvements notwithstanding, international traffic, which in normal times accounts for close to two-thirds of global air travel, remains virtually non-existent. Most countries are still closed to international arrivals or have imposed quarantines that have the same effect as an outright lockdown.

“Summer — our industry’s busiest season — is passing by rapidly, with little chance for an upswing in international air travel unless governments move quickly and decisively to find alternatives to border closures, confidence-destroying stop-start re-openings and demand-killing quarantines,” he said.

The IATA chief castigated the U.K. for its new 14-day quarantine on anyone returning from Spain, which is experiencing a surge in new COVID cases.

Consumer confidence wanes

Passenger traffic in June serves as a reminder of the challenges ahead for the industry after an initial spurt in bookings led to increased optimism across the industry. 

Traffic, measured by revenue-paying passengers multiplied by distance traveled, fell 86.5% compared to June 2019. That was an improvement from the 91% drop in business during May, but fell short of many industry expectations and was mostly driven by rising demand in domestic markets, notably in China, according to IATA. The June load factor set an all-time low for the month at 57.6%.

IATA said the recovery in short-haul and domestic travel is still expected to happen faster than for international travel, which was 95% lower than last year in June. As a result, passenger emplanement figures will rise faster than traffic measured in revenue passenger kilometers. But IATA said the recovery of domestic business will also fall back by a year from 2022 to 2023. For 2020, the number of passengers carried is expected to decline by 55% compared to 2019 – worse than the April forecast of a 46% decline. 

The revised outlook takes into consideration the novel coronavirus’ resurgence in the U.S., but also flare ups in China and concerns that the virus is not contained in emerging economies, such as Latin America. Emerging markets and the U.S. represent about 40% of the global air travel market and their continued closure, especially to international travel, is a significant drag on recovery, IATA said.

Corporate travel budgets are expected to remain constrained as companies try to save money until the economy improves. IATA said recent surveys suggest the high correlation between GDP growth and air travel has weakened, particularly with regard to business travel as companies turn to video conferencing as a substitute for in-person meetings.

Last week, however, United Airlines’ executives argued the video conference phenomenon is temporary and that corporate sales teams will try to meet customers as soon as possible. 

While pent-up demand exists for visiting family and friends, and leisure travel, consumer confidence is weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19, IATA said. About 55% of respondents to IATA’s June passenger survey don’t plan to travel in 2020.

IATA forecast passenger numbers will rise 62% next year, but will still be 30% below the 2019 level. 

de Juniac reiterated a request for governments to waive use-it-or-lose it requirements for takeoff and landing slots at busy airports during the upcoming winter season so airlines aren’t forced to operate money-losing flights to retain access during the downturn. 

Cargo green shoots

Cargo business for the airline industry is showing some improvement, but the gains are small and the future very uncertain, according to IATA and market experts.

IATA said global demand, measured in cargo-ton-kilometers, fell 17.6% in June, a modest improvement from the 20.1% year-over-year fall recorded in May. The all-important international market fared worse, down 19.9% from a year ago.

Improved economic activity didn’t translate into better air transport business. Global manufacturing demand stabilized in June, with the Purchasing Managers Index up 11 points compared to May – the strongest monthly increase since 1999 and the highest level since January. IATA said airfreight didn’t grow as much as possible because it lost market share to cheaper surface modes. 

“Cargo is, by far, healthier than the passenger markets but doing business remains exceptionally challenging. While economic activity is re-starting after major lockdown disruptions there has not been a major boost in demand,” de Juniac said. “The rush to get personal protective equipment to market has subsided as supply chains regularized, enabling shippers to use cheaper sea and rail options.”

All regions recorded cargo declines in June, with carriers in Europe and Latin America leading the way. North American carriers reported an 8.8% decline in cargo volume, the smallest of any region. IATA attributed the relative cargo strength to several airlines with large freighter fleets as well as U.S. emergency relief for the airline industry. Less demand for hospital gear contributed to a 20% reduction in freight volume for Asian carriers.

Cathay Pacific and sister all-cargo carrier Air Hong, for example, experienced a 5% month-over-month drop in tonnage during June as demand for medical supplies waned. Overall, the group experienced a 43% drop in cargo and mail tonnage from June 2019. 

Meanwhile, the U.S. Bureau of Transportation Statistics said air carriers hauled 10.7% less cargo between the U.S. and foreign points in May on an annual basis, with European traffic down 40%.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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Eric Kulisch, Air Cargo Editor

Eric is the Air Cargo Market Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at ekulisch@freightwaves.com

One Comment

  1. I don’t see any solutions for airlines and their present need to abide by uneconomic load factors….. except for the one solution I’ve propounded in that article above. The mere suggestion of creating a 20% ethyl alcohol pumped atmosphere inside an airliner cabin automatically gets people thinking in terms of its flammability – even though you could light a cigarette safely in that ethyl/alcohol percentage. The cumulative condensation upon surfaces of the e/a, as well as the wetting of porous masks would keep people virus free. i.e. from passing it on or taking it in. If they directed the fresh air vents at their faces, they’d still be predominantly breathing almost unadulterated air. This manipulated atmosphere would work both inflight and during boarding/deplaning. You could even have it running in the airbridges. The addition of UVC lights in the recirc air [before the HEPA filtration] would also increase the kill factor for the virions. They have already woken up to that evident solution.

    The cost of such a modification (see my article) wouldn’t be that great, certainly not in comparison to the certainty of uneconomic load factors driving ticket prices up to astronomic levels – deterring people from air-travel through the fear of almost certainly contracting the virus [even if there was but one carrier aboard (asymptomatic or not)]. The cost of ethyl alcohol? Unbelievably low in larger quantities. The govt mark-up when taken as an alcoholic drink is HUGE. But no doubt the FAA is simply not going to endorse any such measure in the wake of their culpability in the 737MAX fiasco. So the airline decline and decimation is a foregone conclusion. Will Boeing survive? Probably, but only because of their importance to the Defence machinery.

    The stats you’re quoting below just about convinces me that extreme steps need to be taken. Defusing that “close contact between individuals” seems to be the key to turning the public transport situation around. But bureaucracy being what it is, you have to take everybody through the fires of Hades first.

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