IATA - COVID-19 outlook for air travel in the next 5 years
12
COVID-19 Outlook for air travel in the next 5 years Brian Pearce Chief Economist 1 13 th May 2020
Transcript of IATA - COVID-19 outlook for air travel in the next 5 years
COVID-19Outlook for air travel in the
next 5 years
Brian Pearce
Chief Economist
1
13th May 2020
40
50
60
70
80
90
100
110
120
2016 2017 2018 2019 2020 2021 2022 2023
Ind
ex
, 10
0 i
n 2
01
9
Global GDP and global RPKs, indexed to equal 100 in 2019
Global GDP
Global RPKsCurrent baseline
Air travel may recover more slowly than most of economyGlobal RPKs recover 2019 levels in 2023, 2 years behind GDP recovery
Source: IATA/Tourism Economics, Air Passenger Forecasts, April 2020
2019 level
Governments have provided unprecedented supportWage subsidies, grants and loans should allow strong GDP rebound
Source: IATA Economics using data from the IMF’s World Economic Outlook, April 2020
0 5 10 15 20 25 30 35 40
South AfricaIndia
MexicoSaudi Arabia
RussiaTurkey
ArgentinaChina
IndonesiaBrazil
KoreaCanada
SpainUnited States
AustraliaFrance
United KingdomJapan
ItalyGermany
% of GDP
Government support for economy in 2020, % of GDP
Spending and tax measures Loans, equity injections, guarantees
Central banks have also injected cash into economiesThe US Federal Reserve has added cash equivalent to 12% of US GDP
Source: IATA Economics using data from Refinitiv Datastream
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
2016 2017 2018 2019 2020
US
$ b
illio
n
Central bank assets, US$ billion
+$2.5 trillion(12% of US GDP)
US Federal Reserve
European Central Bank
Bank of Japan
Business confidence has rebounded in ChinaAs lock-down relaxed in China ‘V-shaped’ rise of business confidence
15
20
25
30
35
40
45
50
55
60
50
= n
o c
ha
ng
e e
xp
ec
ted
Business confidence (PMI) in manufacturing and services
China
US
Germany
Source: IATA Economics using data from Markit
Solving health challenge critical for international travelUntil vaccine, opening borders to travel requires fall in COVID-19 risk
Source: IATA Economics using data from the World Health Organization (WHO)
0%
5%
10%
15%
20%
1-Apr 5-Apr 9-Apr 13-Apr 17-Apr 21-Apr 25-Apr 29-Apr 3-May 7-May
New COVID-19 cases, % of total cases, 7-day moving average
RussiaIndiaBrazil
USJapanChina
China domestic air travel lagging business confidence Rise in flights with return to work & VFR, but discretionary travel weak
Source: IATA Economics analysis based on WHO data, and data provided under license by FlightRadar 24. All rights reserved.
0
10000
20000
30000
40000
50000
60000
70000
80000
0%
10%
20%
30%
40%
50%
60%
China domestic flights, COVID-19 new cases
Da
ily r
ate
of
ch
an
ge
in C
ov
id-1
9 C
as
es
,7
-da
y m
ov
ing
av
era
ge
Nu
mb
er
of
flig
hts
pe
r w
ee
k
Domestic flights
New cases COVID-19
Average trip length will fall sharply Domestic markets open first and initial preference for short-haul trips
Source: IATA/Tourism Economics, Air Passenger Forecasts, April 2020
1,850
1,900
1,950
2,000
2,050
2,100
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Av
era
ge
tri
p le
ng
th,
kilo
me
ters
Average trip length, kilometers
Fall of 8.5%
International RPKs will lag domestic air travel marketsInternational air travel may not recover 2019 levels until 2023-24
Source: IATA/Tourism Economics, Air Passenger Forecasts, April 2020
40
50
60
70
80
90
100
110
120
130
2016 2017 2018 2019 2020 2021 2022 2023 2024
Ind
ex
ed
to
eq
ua
l 10
0 i
n 2
01
9
Global domestic and international RPKs, indexed 2019=100
International RPKs
Domestic RPKs
Long-term drivers for expanded demand remainPopulous emerging markets are still likely to want more air services
Source: IATA/Tourism Economics, Air Passenger Forecasts, April 2020
0.0
0.1
1.0
10.0
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
Airline passenger trips per year and GDP per capita
India
France Germany
Trips per capita
GDP per capita (US$, inflation-adjusted)
US
Nigeria
Ethiopia
Russia
ChinaBrazil
Return to growth post-COVID but at a lower levelGlobal RPKs forecast to be 32%-41% below expected levels in 2021
Source: IATA/Tourism Economics, Air Passenger Forecasts, April 2020
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
2012 2014 2016 2018 2020 2022 2024
Bill
ion
Global RPK medium term scenarios
Pre-COVIDforecast
Current baseline
COVIDsetback scenario
2021: 32% below pre-COVID expected level
2025: 10% below pre-COVID expected level
2021: risk that RPKs could be 41% lower
