2 min read.Updated: 09 Jun 2020, 08:05 PM ISTRhik Kundu
The losses this year will be the biggest in aviation history—over $84 billion in 2020 and nearly $16 billion in 2021
By comparison, airlines lost $31 billion with the Global Financial Crisis and oil price spike in 2008 and 2009
NEW DELHI :
Airlines globally will lose over $84 billion, the biggest in aviation history, during financial year 2020 due to the covid-19 pandemic and a muted travel appetite, while losses next year are seen at $16 billion, Alexandre de Juniac, director general and chief executive of industry body International Air Transport Association (IATA) said on Tuesday.
"The losses this year will be the biggest in aviation history—over $84 billion in 2020 and nearly $16 billion in 2021. By comparison, airlines lost $31 billion with the Global Financial Crisis and oil price spike in 2008 and 2009. There is no comparison for the dimension of this crisis," Alexandre de Juniac said during a media briefing session.
IATA expects the share of world GDP (Gross domestic Product) spent on air transport to be halved in 2020, totaling $434billion (0.5% of GDP) amidst widespread lockdowns.
"In the near-term, consumers will face lower real travel costs as airlines are significantly discounting ticket prices to stimulate demand. The average return fare (before surcharges and tax) of $254 in 2020 is forecast to be 68% lower than in 1998, after adjusting for inflation," IATA said in a statement.
"We expect RPKs are estimated to plummet by 55% in 2020 compared to last year. The recovery in the second half of 2020 is predicted to come initially from domestic markets and then via a gradual opening of international markets," it added.
Revenue Passenger Kilometers (RPK) or Revenue Passenger Miles (RPM) is an airline industry metric that shows the number of kilometers traveled by paying passengers. It is calculated as the number of revenue passengers multiplied by the total distance traveled by them.
However, IATA expects a global recession and weak consumer confidence, following the outbreak of covid-19 pandemic, to put pressure on the recovery in air travel demand.
"World trade is also forecast to fall by 13% in 2020 indicating a steep decline in air cargo volumes. However, trade is expected to rebound strongly next year, which will be supportive for air cargo volumes in 2021," IATA added in its statement.