Global airlines could lose as much as $95 billion in 2021 according to a new analysis by the International Air Transport Association (IATA). Previous forecasts from the industry body predicted that airlines could turn cash positive in the fourth quarter of this year but renewed travel restrictions prompted by the fear of new vaccine-resistant strains of the novel Coronavirus mean that airlines are likely to continue losing money throughout the rest of 2021.
“With governments having to tighten border restrictions, 2021 is shaping up to be a much tougher year than previously expected,” commented IATA director general Alexandre de Juniac on Wednesday.
“Our best-case scenario sees airlines burning through $75 billion in cash this year. And it could be as bad as $95 billion,” de Juniac continued. “If governments are unable to open their borders, we will need them to open their wallets with financial relief to keep airlines viable.”
IATA has been urging governments to ease travel restrictions and lift quarantine rules through the use of rapid pre-departure testing. Those demands have largely fallen on deaf ears with many countries mandating repeated testing and quarantine for anyone that chooses to fly.
Airlines say that some of the latest rules have effectively shut down international travel with no roadmap out of the current restrictions.
IATA now hopes that its digital ‘Travel Pass’ app that securely stores test results and vaccination data might be enough to convince governments to slowly ease restrictions. The app has been embraced by at least eight airlines and one government and IATA says a fully functional version of the app should be ready by next month.
Etihad Airways and Qatar Airways are amongst the airlines that plan to use the app for both test and vaccination verification. Singapore Airlines is currently using Travel Pass just for proof of pre-departure testing and Emirates is expected to start using the app for the same purpose in April.
With little certainty as to when borders might reopen many travellers are holding onto their cash. Forwards bookings for the peak summer season between July and August are down 78 per cent compared to 2019.
Airlines are now unlikely to turn cash positive until 2022 at the earliest, while a full recovery might not come until 2023 or 2024.
Some airlines, however, are expecting a much better summer season with UK operators witnessing a sales surge after Prime Minister Boris Johnson announced plans to allow foreign travel as of mid-May. In recent days, Qatar Airways has also invited laid-off pilots to apply for their jobs back in the hope that travel demand will start rising in the coming weeks and months.
Dubai-based Emirates on the other hand has reassessed its optimistic take of 2021 and now doesn’t anticipate a meaningful recovery until much later this year.
Photo Credit: British Airways
