Industry traffic to recover in 2024, IATA data suggests

Global air capacity is expected to recover from COVID-19-related travel restrictions — but not until 2024. The International Air Traffic Association (IATA) laid out current challenges for airlines and carriers in the return to air traffic and profitability following the COVID-19 pandemic in a September report. The Americas will reach 2019 traffic levels in 2023, while China will not do so until 2025, IATA predicts. [caption id="attachment_57132605" align="aligncenter" width="763"] Data / IATA[/caption] IATA’s Global Air Connectivity Index found scheduled passenger capacity has recovered to 68% of pre-pandemic levels for international connectivity and 89% for domestic. In 2019, bellyhold capacity made up 50% of available cargo capacity and while the market has seen the rise of freighter capacity spurred by the pandemic, the return of pre-pandemic connectivity marks overall improvement for the industry. Global available cargo tonne kilometers (ACTKs) have grown with incoming belly capacity and standard freighters, according to IATA. Carriers continue to expand their long-haul passenger flights as travel demand expands. United Airlines saw unusually high travel in September , the third strongest month in the airline’s history, which it attributes to a changing patterns for customers. “People want to travel and have experiences, and hybrid work environment untethered them from the office and gave them the newfound flexibility to travel far more often than before,” United Chief Executive Scott Kirby said during the company’s Q3 earnings call. “This is not pent-up demand. It’s the new normal.” [caption id="attachment_57132604" align="aligncenter" width="732"] Data / IATA[/caption] Travel restrictions impede recovery The No. 1 challenge to air traffic and profitability is travel restrictions, according to IATA’s report. “As the World Health Organization states that the end to the pandemic is in sight, the time to eliminate ineffective travel restrictions has surely arrived,” the report notes. IATA has called for lifting of travel restrictions throughout the past year in areas like Canada, Hong Kong and Japan , asking governments and other health leaders to allow for international air travel without restrictions to motivate industry growth. Canada dropped its border measures Sept. 30, Hong Kong reduced its mandatory quarantine in September and Japan allowed for more visitors as of Oct. 10. China’s COVID-19 restrictions have limited the country’s economic growth rate to 3% for this year, which could further impact the global economy and cargo outlook, IATA reported. Additionally, other macroeconomic factors, including inflation , high jet fuel prices and tight labor markets , also are affecting airline profitability, the report stated. “Outsized pricing power in the upstream aviation value chain will likely continue to manifest itself in 2023, in addition to the very real challenge of coping with the impact of the more than 400 aircraft retained in Russia,” IATA notes. Despite these challenges, financial profitability is still within reach for the industry as a whole, according to the report. Cargo growth Despite lower capacity, cargo tonne kilometers (CTKs) outperformed passenger traffic in Q2 compared with pre-pandemic levels. CTK growth has followed the slowdown in GDP growth, declining 3% year over year in July, according to IATA. Global airline cargo revenue should reach $191 billion in 2022, a 6% decrease YoY but 91% growth compared with 2019. [caption id="attachment_57132606" align="aligncenter" width="757"] Data / IATA[/caption] Latin America, Europe and China continue to provide strong cargo volumes. Meanwhile, North America is benefiting most from a strong U.S. domestic market and international traffic recovery, tied to “post-pandemic openness,” according to IATA. Join Air Cargo World for our next webinar, “Dangerous goods in focus: Shoring up air cargo logistics,” on Tuesday, Nov. 15, at 11 a.m. ET. Click here for more information and to register.

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