Global Airlines Loss to Reduce to $52bn from $138bn – IATA
It is no secret that COVID-19 has devastated the aviation industry. In 2020, airlines globally lost $138 billion. Losses will reduce to $52 billion this year, according to the International Air Transport Association.
The Director General of IATA, Willie Walsh, while giving a speech at the UK Aviation Club said we expect a further reduction to a $12 billion loss in 2022. Add that up, and the toll that COVID-19 will take on industry finances tops $201 billion.
In a century of commercial aviation that has been marked by many crises, the dimension of this one is beyond compare.
We are, however, past the worst point. And we can see a path towards normality.
The cargo business is already operating at 8% above pre-crisis levels. Air cargo has been a lifeline for many—delivering vaccines, PPE, medical equipment and even e-commerce. In doing so, it has also been the revenue star for many in the industry.
Where governments have not restricted travel, the passenger business recovery has been swift. Domestic markets are expected to reach nearly 75% of pre-crisis levels by the end of this year, but international travel—where we see travel restrictions—is only expected to reach 22%. Next year we expect domestic markets to be nearly at pre-crisis levels. But international travel will lag at just 44%.
We are moving in the right direction, if not as fast as we would like to go. And the mood of the AGM was one of cautious optimism.
Simple Testing, Affordability, Sustainability Keys to Restoring UK Aviation
The International Air Transport Association (IATA) outlined an agenda for the UK to restore its air transport sector to health by embracing a simpler COVID-19 testing regime, ensuring affordable, competitive airport costs, and working for net-zero air transport.
Speaking at the UK Aviation Club, IATA Director General Willie Walsh emphasized the value of face-to-face meetings and the desire of travelers to get flying again. But he warned that by restricting travel and persisting with expensive PCR testing, the UK had failed to capitalize on its early start in COVID-19 vaccinations, and slipped behind its principal EU partners.
“In terms of day-to-day life, the UK is far more pragmatic in managing COVID-19 than many other states. But its approach to travel continues to focus on restrictions which cannot be justified based on risk. Over the period from February to August, the PCR test positivity rate of arriving passengers to the UK was 1%. And the positivity rate from testing the general population was 7%. So we can confidently say that travel is not increasing the UK’s COVID-19 risk,” said Walsh.
While welcoming recent moves to cut the number of ‘red list’ countries and finally proposing an end to PCR tests for vaccinated passengers, Walsh warned that problems remain, principally with the new post-arrival antigen test. The UK is relying on a closed shop of private testing providers, the effectiveness of which the Competition and Markets Authority has described as “a lottery”. And prices remain high compared to convenient high-street options elsewhere in the world.
COVID-19 document checks have also been identified as a barrier to travel. The UK must lead with automated digital solutions to take the burden off airlines. “Manual paper checks by airlines are unsustainable as volumes come back. We need to automate the process…airlines are not your border guards,” said Walsh.
Affordable, competitive air transport costs
The slow UK recovery in air connectivity risks being derailed by the proposed charges increase at the UK’s primary air gateway, Heathrow airport. Leaked papers reveal Heathrow airport’s owners are seeking 90% increases in charges, adding around GBP100 to the cost of an average family’s holiday.
“It’s time for Heathrow’s shareholders to step up. They have enjoyed steady returns for years. Instead of expecting the travelling public to be covering excessive returns, it’s time for them to invest. All eyes will be on the CAA to ensure they are doing their job in protecting the consumer by pushing back on the airport’s outrageous behaviour,” said Walsh.
On 4 October 2021, airlines at the IATA Annual General Meeting in Boston agreed to achieve net-zero carbon emissions by 2050. This ambitious commitment brings the industry in line with the goal of the Paris climate agreement to limit global warming to 1.5°. Net-zero will be achieved through a combination of sustainable aviation fuels (SAF), new technology, improved infrastructure and operations, and, where in-sector solutions are not possible, through the use of offsetting and carbon capture.
“For aviation, net zero is a bold, audacious commitment. Achieving it needs all stakeholders—including governments—to play their part. Together we can make sustainable aviation a reality. In doing so, we will secure the freedom to fly for future generations,” said Walsh.
In terms of specific support from the UK government, airlines would like to see policies for greater investment in SAF through capital grants, production incentives, government-backed loans and ‘green bonds’.
“An emphasis on incentives to establish a thriving UK SAF industry would show this off to the world as a global best practice that will help states avoid a patchwork of different regulations or market distortions. The goal should be energy self-sufficiency for sustainable connectivity. And that would come with the added benefit of creating thousands of well-paid jobs,” said Walsh.