Covid-19 batters airlines: $201 billion in losses

Airlines will report $201 billion in losses due to Covid-19 by the end of 2022, according to estimates by the International Air Transport Association (IATA). While losses have reduced sharply from the onset of the pandemic — from $137.7 billion in 2020 to an estimated $51.8 billion in 2021 — the biggest deterrent to air travel continues to be quarantine measures.

“People are frustrated with Covid-19 travel restrictions. They don’t see the necessity of such restrictions to control the virus,” IATA’s director-general Willie Walsh said in a recent press note. “The message they are sending to governments is: Covid-19 is not going to disappear, so we must establish a way to manage its risks while living and traveling normally,” he added.

According to IATA data, demand is expected to stand at 40% of 2019 levels in 2021, and rise to 61% in 2022. Total passenger numbers are likely to reach 2.3 billion in 2021, and 3.4 billion in 2022 — similar to 2014 levels, but significantly below 4.5 billion in 2019. However, robust demand for air cargo is expected to continue, with the 2021 and 2022 demand at 7.9% and 13.2%, respectively, above 2019 levels.

While Asia-Pacific carriers are expected to see losses decline from $11.2 billion in 2021 to $2.4 billion in 2022, the region continues to suffer some of the “most draconian travel restrictions”. While there has been some alleviation in restrictions, IATA says significant improvements in international markets are not expected until later in 2022. “We fully agree that vaccinated people should not have their freedom of movement limited in any way. In fact, the freedom to travel is a good incentive for more people to be vaccinated,” said Walsh.

The magnitude of the Covid-19 crisis for airlines is enormous. To survive, airlines have dramatically cut costs and adapted their business to whatever opportunities were available. “We are well past the deepest point of the crisis. While serious issues remain, the path to recovery is coming into view. Aviation is demonstrating its resilience yet again,” added Walsh.

IATA believes the scale of this crisis needs solutions that only governments can provide. “Financial support was a lifeline for many airlines during the crisis. Much of that—approximately $110 billion— is in the form of support that needs to be paid back. Combined with commercial borrowing the industry is now highly leveraged,” pointed out Walsh.