Airlines Expect Turbulent 2021

Last year's falloff erased two decades of passenger growth.
Vincent RyanJanuary 5, 2021
Airlines Expect Turbulent 2021

Travel data and analytics company Cirium said in a report that “the pandemic and its consequences wiped out 21 years of global passenger traffic growth in a matter of months, reducing traffic this year to levels last seen in 1999.”

A press release about the report added that passenger traffic in 2020 fell 67% year-over-year, with only 2.9 trillion global revenue passenger kilometers (RPKs), or 1.8 trillion miles, recorded. COVID-19 hit the airline industry hard as countries closed their borders in a bid to contain the disease spread.

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Airlines operated 16.8 million flights from Jan. 1 to Dec. 20, 2020, compared with 33.2 million in the comparable period in 2019.

As per CNBC, more than 40 airlines have completely ceased or suspended operations, and experts predict more pain.

Recovery: Asia-Pacific and North America were the fastest to recover. The recovery trends showed that airports with domestic flights saw higher traffic compared with those flying international.

Major cities such as New York, Beijing, and Shanghai were missing from the busiest airports list due to their international traffic in normal times. International travel fell 68% compared with 2019, while domestic travel was down 40% YoY.

Air traffic recovery showed no correlation in the country’s ability to contain the pandemic. Australia has lowered the number of new COVID-19 cases to almost zero, but domestic traffic remained down 89% in September. In contrast, Brazil has been one of the worst affected countries but has seen a steady recovery in domestic flights and traffic since July, the report said.

What Lies Ahead For 2021: Airlines predict that coronavirus vaccines will reignite air travel demand in 2021, the Wall Street Journal reports.

Delta Air Lines chief executive officer Ed Bastian expects improvement starting this spring. Alaska Air Group President Ben Minicucci expects travel demand to reach 80% of pre-pandemic levels by summer.

United Airlines HoldingsCEO Scott Kirby told WSJ that travel would not get back to normal in 2021 unless vaccines are widely distributed. “This is one of those strange situations where I think we’re probably better at forecasting what’s going to happen a year from now than we are what’s going to happen next quarter,” added Kirby,

In 2021, the competition will be fierce with less international travel, and the airlines will have to compete for a smaller pie. Legacy international airlines like United, Delta, and American Airlines Group have a tough road ahead.

JetBlue Airways is adding new routes and announced service to new cities, including Miami and Key West. Southwest Airlines is adding new domestic routes as it seeks to expand its reach.

WSJ notes that China’s recovery from the pandemic could indicate how things play out in the U.S. after widespread vaccination. Domestic air traffic in China returned to pre-pandemic levels in October, down just 1.4% year over year.

This story originally appeared on Benzinga.

© 2021 Benzinga does not provide investment advice. All rights reserved.

(Photo by FREDERIC J. BROWN/AFP via Getty Images)