A new report from the Official Airline Guide shows that airline recovery in 2021 is less likely to happen. OAG’s John Grant suggests in his report that industry losses for 2021 are more likely larger than they expected if nothing significant will happen in the remaining months of the year.
International Air Transport Association had a forecast of $47.7 billion loss for the industry in 2021. Though it’s a big improvement from 2020’s industry loss estimated at $126.4, numbers are far from pre-pandemic numbers.
Travel Demand Softens
According to OAG, 18 million seats were removed by airlines around the world as travel demand softens. In seven weeks, 15% of airline capacity was taken out. Aside from seats taken out, border restriction also plays in the slow air travel recovery for 2021. OAG says that the majority of key markets remain closed. US, Europe, and China still have limited air travel.
The US recently announced the extension of its ban on non-essential border crossing from Canada. It also didn’t reciprocate the EU’s gesture to open their borders for vaccinated American travelers.
Australia had the worst capacity cut according to OAG. The report says that “In 2019, there were some 1.5 million weekly available seats in the Australian domestic market, this week there will be around 480,000”. International travel capacity is worse with Australia running at just 15% compared to its pre-pandemic seat capacity. New Zealand is also struggling to fill international seats at just 12% compared to its pre-COVID international capacity.
US Market Plays a Crucial Role in Air Travel Recovery
According to OAG, the US will play a major role in air travel recovery. It also noted that the next few weeks will be crucial whether or not air travel will get to recover.
The report notes that “A reopening of the US market for Europeans in the next week or so will undoubtedly lead to the normal rush of demand that we have seen in other markets; if it remains closed then for many carriers the forthcoming winter season will be as bad as last year”.
