Global airline industry organization the International Air Transport Association (IATA) on Wednesday voiced cautious optimism that the European aviation industry could take off again in the second half of the year thanks to the rollout of vaccines. But it still called for more government rescue packages to weather the COVID-19 storm.
Reiterating that “this is the most challenging crisis the industry has ever faced,” the Geneva-based IATA showed in its latest assessment that passenger traffic continued to fall in February, both compared to pre-COVID levels and the month of January.
International passenger demand in February was 88.7 percent below February 2019, a further drop from the 85.7 percent year-to-year decline recorded in January and the worst growth outcome since July 2020.
Performance in all regions worsened compared to January, the association, representing some 290 airlines comprising 82 percent of global air traffic, said.
“February showed no indication of a recovery in demand for international air travel. In fact, most indicators went in the wrong direction as travel restrictions tightened in the face of continuing concerns over new coronavirus variants,” said Willie Walsh, IATA’s new director general, in his first media briefing since taking office on April 1.
According to the latest data, European carriers recorded an 89-percent drop in passenger traffic in February compared with February 2019, substantially worse than the 83.4-percent decline in January compared to the same month in 2019.
On the bright side, cargo demand in Europe was largely unaffected by the new lockdowns and operating conditions remain supportive for air cargo, IATA said, as European carriers posted a 4.7-percent increase in demand in February compared to same month in 2019.
Asked about his outlook for European air travel demand, the new IATA boss said: “We should remain optimistic that the second half of this year will be much more positive than we have seen so far.”
“It is still early in the year. We are only in April. We have seen some of these trends change, but I think the expectation of the vaccine rollout accelerating should be one of the reasons why we should be optimistic that things will start to improve,” he said.
Across Europe, airlines and airports continue to be slammed by the impact from COVID-19 and have been calling for government subsidies and rescue packages to stay afloat.
In February, an analysis by IATA showed that the airline industry is expected to remain cash negative throughout 2021. Estimates for cash burn have ballooned from 75 billion U.S. dollars to 95 billion dollars for this year from a previously anticipated 48 billion dollars.
“I think it’s fair to say that airlines will access any forms of support that they can get. You have seen airlines tap the capital, debt and equity markets. They have received government grants, government aid, loan guarantees,” Walsh said.
“All of this is very welcome and all of it is necessary. This is a severe crisis, the likes of which we have not seen before. We continue to see the industry needs cash,” he noted.
“We accept that all forms of aid need to be accessed and we welcome it and continue to welcome it. I don’t think the industry is ready to stand on its own feet at the moment,” he stressed.
On Tuesday, Air France-KLM announced that it would receive as much as 4 billion euros (4.7 billion U.S. dollars) from the French government, which could raise its stake to as high as 30 percent as part of a bailout and recapitalization plan for the indebted carrier.
In Poland, Prime Minister Mateusz Morawiecki said in February that the government would participate in rescuing Polish airlines LOT, which suffered passenger volume drop like nearly all airlines.
“I don’t see any problem with governments holding stakes in airlines. Many governments already hold stakes and in many cases exercise influence over airlines. This is nothing new,” Walsh stressed.
Frankfurt Airport, one of the busiest air hubs in Europe, posted a loss of 690.4 million euros last year, its first negative financial result in almost 20 years.
Germany’s largest airline Lufthansa posted record losses of 6.7 billion euros for the financial year of 2020, after a profit of 1.2 billion euros in 2019. The company still expects a negative operating result for fiscal 2021.
In Belgium, Brussels Airlines booked a loss of 293 million euros in 2020, as passenger numbers plummeted by 77 percent to 2.4 million.
Austrian Airlines announced in March that it would cut 650 more jobs by 2023 and reduce its fleet size from the current 80 to 58 at least until 2024/25.
IATA has planned to launch a global and standardized digital IATA Travel Pass for COVID-19 test results and vaccine certificates for passengers in mid-April.
Singapore announced this week that travelers flying to the island state can start using the travel pass from next month as the country takes steps to reopen its borders.
“It’s important that the IATA travel pass is introduced and accepted because we need to be able to offer customers a digitalized option to travel. We clearly want to see the industry get back up to full speed in a safe and coordinated way,” Walsh said.
“We are trying to get more airlines. I think we have 25 airlines now in total who are trialling it. The more we trial it, the better the feedback we get,” he said.
IATA, however, stressed that booking for the critical summer travel and holiday season remains a concern.
British Prime Minister Boris Johnson said Tuesday that the government has not made a decision on whether Britons can go for a foreign holiday from May 17 as previously planned.
A report from Airlines UK, the industry body representing UK-registered carriers, showed that if international travel reopening was delayed to September, the cost could amount to 55.7 billion pounds (about 77.2 billion U.S. dollars) in lost trade and 3 billion pounds in the UK’s tourism sector. Enditem