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Is the recovery in airline industry largely localised?

Team Veye | 18 Oct 2021

Is the recovery in airline industry largely localised?

COVID-19 hit almost all sectors of the economy but the Aviation industry, by and large, was among the worst-hit sectors. The lockdowns and restrictions in the majority of nations impacted not only international air travel but soon engulfed domestic travel too.

Despite a cumulative $201 billion loss for the airline industry (2020-2022), the International Air Transport Association has recently revealed improved results for aviation.

The air cargo business is performing well with robust demand for air cargo expected to continue, with 2021 demand at 7.9 per cent above 2019 levels and growing to 13.2 per cent above 2019 levels for 2022.

Domestic demand is seen to be driving the recovery. Domestic travel can reach near pre-crisis levels in 2022. The challenge is international markets which remain severely depressed as government-imposed restrictions continue.  

Although there could be limited risk of further disruption to air travel in various countries, an increase in vaccinations could lower border restrictions and increase demand for air travel over the next 12 to 18 months.

Moody’s also upgraded its outlook for the global airline's industry to "positive" from "negative", as the rating agency expected steady vaccine rollouts across the world to drive a rebound in commercial air travel.

The recovery continues to be very localized as some countries maintain heavy restrictions while others open up travel aggressively amid rising vaccinations.

While the US announced plans to open up to European travellers, in the UK, restrictions have been streamlined, with eased testing and quarantine requirements for fully vaccinated travellers arriving from countries with lower rates of Covid-19 infections. Japan is seeing the largest projected increase of airline passenger volumes as a percentage of July 2019 numbers due to a steep decrease in Covid-19 cases.

Australia has announced plans to open up to international travel for the first time in 18 months. The Government’s intention is that once changes are made in November, the current overseas travel restrictions related to COVID-19 will be removed. It also means there will be no travel restrictions for fully vaccinated Australians entering or leaving Australian shores.

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