Aviation industry nosedives: Dismal year ahead for airlines and passengers

The International Air Transport Association (IATA), the organisation which regulates the world’s aviation industry, expects the industry to remain troubled throughout 2021.

The rollout of vaccines and positive sentiment relating to the handling of COVID-19 initially led to optimism. There was a feeling that 2021 would bring an end to travel restrictions and the limitations of freedoms seen for almost a year under the pandemic as far as international travel was concerned.

However, South Africans must brace themselves for increases in the cost of air travel as well as further limitations on the choices of places they will be permitted to travel to in the coming months.

ESTIMATED AVIATION INDUSTRY LOSSES

Airlines like South African Airways and Air Mauritius have been grounded for nearly a year. Carriers like Air Namibia have collapsed altogether. Being grounded or unable to operate profitable flight schedules has meant airlines are incurring huge losses and even facing closure.

In November 2020, IATA predicted that the world’s aviation industry would return to profitability by the fourth quarter of 2021. IATA previously estimated that the world’s airlines would burn through $48bn (R716.6bn) in 2021. Revised estimates now put the figure between $75bn and $95bn (R1.1-trillion and R1.4-trillion).

The organisation now says profitability is not likely before 2022.

“A functioning airline industry can eventually energise the economic recovery from COVID-19. But that won’t happen if there are massive failures before the crisis ends,” Iata director-general Alexandre de Juniac said in a press release.

IMPACT OF BORDER CLOSURES ON INDUSTRY

Prolonged border closures and extended flight bans are wreaking havoc on the global aviation industry. Countries like Australia and New Zealand have been closed to international airlines and travellers for almost one year. This has resulted in major revenue losses for airlines.   

Most international airlines across the globe have been severely affected. Australia’s national airline, Qantas, has posted a statutory loss of US$1.17bn (R17.4bn) for the six months to 31 December 2020.     

De Juniac said governments needed to provide more financial support for airlines if border closures kept being extended, preventing airlines from operating and generating income. This has also led to a huge slump in demand from passengers.

“If governments are unable to open their borders, we will need them to open their wallets with financial relief to keep airlines viable,” De Juniac said.