Last year, air travel recovered to 41.6 percent of 2019 levels mainly thanks to domestic travel, but the past year was another difficult one for the airline industry, the International Air Transport Association (IATA) reported on January 25. Cargo outperformed 2019 and was up by 6.9 percent. IATA cautiously optimistic after another difficult year.
2021 was an improvement over the first year of Covid when revenue passenger kilometers (RPKs) were down by 65.8 percent. Domestic traffic was the best performer at -28.2 percent compared to 2019, but international suffered from continuous border closures and restrictions that kept RPKs 75.5 percent lower. That results in an average of -58.4 percent down on 2019, or 41.6 percent up.
Struggling the most since March 2020 has been the Asia Pacific. Despite a slight improvement since October, traffic is still 66.9 percent down on 2019 levels but on average lags 93 percent behind. The Asia Pacific used to have a 13.3 percent share in international air travel, but this has been reduced to just 1.5 percent last year, said Director General Willie Walsh. “This is solely down to restrictions imposed by governments.” RPKs in the Middle East ended last year at -69.9 percent, Africa 62.8, Europe 61.3, Latin America 47.4, and North America at 39 percent.
By domestic region, Russia has outperformed all throughout the year and produced RPKs 24.2 percent up from 2019. The Us is 23.8 percent down, China 24.4 despite ups and downs during the year, Brazil 27.2, India 41.8, Japan 57.9, and Australia 62.4, thanks to the many border closures.
Full-year demand for cargo was 6.9 percent up from 2019 and even 18.7 percent on 2020. North America pushed cargo tons kilometers up by 19.8 percent, but the Middle East (10.5), and Africa (10.2) also performed well. The weakest region for cargo was Latin America at -15.4 percent.
Walsh was positively surprised by the recovery of premium travel, not to be confused with business travel. As various airlines have reported, many leisure travelers have opted to book premium seats. Premium recovers pretty much at the same level as that of Economy and was even slightly ahead in November, the latest available month on this topic.
IATA’s surveys confirm that the willingness to travel confirms strong as is hardly influenced by rising Covid infection numbers. “As we said on many occassions, travel restrictions do very little to suppress the transmission of the virus”, said Walsh. As the current Omicron variant is expected to wind down in the coming months and governments reduce travel restrictions, Walsh is optimistic about 2022.
On the downside are rising fuel costs, labor shortages, and – as a result – rising labor costs. Jet fuel was at an average of $101.1 on January 21, in contrast to $77.8 that IATA was forecasting in October. “There is still a lot of challenges out there for airlines, in particular as we go through the ramp-up of activity. Rising fuel costs will represent a financial challenge. The number that has hedges fuel remains historically low. There are headwinds ahead, but the flip side is that generally, a high oil price reflects a strong economic environment which normally is beneficial to the industry.”
Walsh recognized that most airlines have been able to remain in business, with some 85 being forced to end operation in the past two years and 39 starting up. Many airlines have been able to hold on thanks to government support, although this wasn’t available in all regions. “There are a number of airlines that continue to be stressed and need to work hard as we go through 2022 but the picture is certainly looking more positive than when we were going into 2021.”
