The recovery of the airlines will be slow and will continue until 2024

IATA forecast due to weakened consumer confidence as a result of the deterioration of employment security, unemployment and the fear of contracting in Corona. The recovery is defined as a return to the 2019 traffic and revenue levels

Travelers in the Corona Age. Photo Depositphotos

IATA International Airlines Organization Recently claimed that he does not expect the aviation industry to recover before 2024 from the slowdown imposed by the corona plague in 2020. The recovery is now defined as a return to the levels of traffic and revenue of 2019. In a previous forecast, the organization predicted that the return to 2019 data will be in 2023.

Brian PierceThe chief economist of the IATA claimed even before the start of the vaccines, that the recovery depends on the extent to which the countries will be able to control the virus. And recently he noted that “it’s clear there will be a problem with the recovery, because we have not seen the kind of progress we need.”

Decrease in all travel profiles

Recently, the IATA press release stated that the main problem is that the public has relatively little interest in flying for leisure travel, that there is a forced demand for visits from friends and relatives, that consumer confidence is weakened in the face of concerns about job security, rising unemployment and the risks of contracting in Corona. Demand for organized travel has also decreased and business travel has remained scarce due to very limited travel budgets, as companies continue to be under financial pressure. According to IATA, surveys show that the link between GDP growth and business travel has been undermined, as a video conference has made personal meetings less necessary.

Analysts were quick to anticipate a long road to recovery from the outset and argued that the aviation industry’s recovery to 2019 productivity levels would be a multi-year matter and as a result workers would be laid off and planes grounded. Their working assumption was that revenues in 2021 would return to 2016 levels.

It should be noted that EL AL’s management also noted on the eve of the issuance of the options on the stock exchange that the volume of activity of EL AL aircraft will reach 75% in 2022-2023 and in 2024-2025 the volume will reach full activity.

Global Travel Association (GBTA – Global Business Travel Association) argues that although business travel spending is set to increase this year due to Corona vaccines by 21%, airlines will not recover from the crisis to pre-epidemic levels by the middle of the decade.

Passenger traffic at airports in the Corona era. Freepik photo

RTA – Government support is committed to reality

Civil Aviation Authority (RTA) Announced in December 2020 that the outbreak of the corona plague that led to severe restrictions on passenger entry by air in almost all countries of the world and a global economic crisis, caused a collapse in demand and the volume of global passenger traffic. According to the updated IATA forecast, the expected decrease in the number of global passengers during 2020 is about 66% compared to 2019, when according to the IATA forecast and forecasts of a number of additional entities also during each of the years 2021, 2022 and 2023 the number of passengers Global will be significantly lower than their number for 2019.

The sharp decline in passenger traffic has led to a decline in revenues of airlines focused on passenger flights and as a result they have recorded heavy losses and severe cash flow difficulties. Given the intensity of the decline in passenger traffic and its continuation on the timeline, the activities of a large part of the airlines to improve their liquidity are not sufficient to prevent the economic collapse of those companies without receiving government assistance and / or raising additional funding sources.

RTA also stated that a relatively large number of countries have undertaken since April to provide separate financial assistance to local airlines. The assistance to the airlines includes, among other things, a government guarantee for bank loans, government loans, government support for the companies’ equity through the purchase of shares and grants. In recent months, there has been a global trend of increasing government assistance to companies as part of increasing equity, with a sample of 16 countries that have pledged to provide assistance to local airlines, about 20% of the countries’ global assistance has so far been provided as part of government assistance. About 80% of the assistance that is provided as part of a government loan or a government guarantee for a loan.

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Source: IAS by www.ias.co.il.

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