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Airlines Bleed Money as Jets Half Empty, Long-Haul Still Grounded

BLOOMBERG, SEPTEMBER 1, 2020

July passenger traffic reached just 20% of 2019’s levels | Signs of domestic rebound fade outside China, IATA says

By Richard Weiss and Christopher Jasper for Bloomberg – Airlines seeking to build up flights after idling their fleets at the height of the coronavirus outbreak are bleeding more cash as jets fly half empty and the most lucrative inter-continental services remain grounded.

Passenger traffic was down almost 80% in July compared with a year earlier, the International Air Transport Association reported Tuesday, saying the slump is steeper than expected at a time when carriers are rushing back flights.

Cross-border traffic reached only 8% of 2019 levels as travel curbs strangled off demand, the trade body said, while an analysis of capacity plans and booking data shows that the gap between supply and demand is widening, draining reserves and dashing hopes for an extended peak season.

The figures suggest that airlines face a grim future in the absence of a Covid-19 vaccine that might spur more people to take a flight and remove the need for restrictions that IATA says are holding back a recovery. The aviation industry has cut 350,000 jobs in the past six months, mostly at airlines, with the total likely to climb toward 500,000 as government furlough support ends, consultants Five Aero said earlier.

While IATA blamed border restrictions for the stuttering recovery, outside of China domestic travel is also foundering, the July figures show, with traffic down 90% on flights within Australia and 73% on intra-U.S. services, largely because of major flareups in infection levels.

IATA Chief Executive Officer Alexandre de Juniac repeated pleas for governments to embrace virus testing at the airport as an alternative to other measures such as quarantines. He called on the European Union to extend over the winter a waiver allowing carriers to keep takeoff and landing slots that they don’t use.

Discount carrier Wizz Air Holdings Plc has attacked the exemption, saying it’s stopping healthier carriers from offering flights at some of the region’s most crowded airports.

De Juniac said revelations regarding an outbreak of the virus among people on a TUI AG service on which face masks weren’t worn were damaging for the industry, but don’t mean that flights are unsafe under agreed rules.

The latest data means IATA’s forecasts for the industry face a downside risk, it said. The body has estimated that carriers will lose a collective $100 billion this year and next, and that traffic may recover to pre-crisis by 2024.

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