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IATA Blames “Slow Virus Containment in The U.S.” In-Part For Poor Aviation Outlook

IATA Blames “Slow Virus Containment in The U.S.” In-Part For Poor Aviation Outlook
Joe Cortez

The International Air Transport Association is blaming local responses to COVID-19 for the continued depression among the airline industry. The trade organization now says carriers may not see pre-pandemic passenger loads until 2024.

The world’s airlines are much more pessimistic about a recovery, due in part to the continued spread of COVID-19 within the United States. The new data comes from a report by the International Air Transport Association, which projects airlines may not get pre-COVID passenger levels until 2024.

U.S. Virus Trends, Reduced Corporate Travel and Weak Consumer Confidence All Factors

From a global perspective, airline passenger traffic as measured in revenue per kilometer was down 86.5 percent compared to the same time in 2019. Although there was some improvement, it was insignificant compared to May 2020, when global traffic was down 91 percent compared year over year.

Global airline performance continued to remain catastrophically low in June 2020, due to the COVID-19 pandemic. Image courtesy: IATA

Global airline performance continued to remain catastrophically low in June 2020, due to the COVID-19 pandemic. Image courtesy: IATA

The IATA report says their negative outlook is now based on three different factors, lead by the increase of COVID-19 cases in the United States. Because a major portion of international travel demand comes from Americans and other major economies, the steady increase in infections and regional lockdowns are creating major problems for an aviation recovery.

“Although developed economies outside of the U.S. have been largely successful in containing the spread of the virus, renewed outbreaks have occurred in these economies, and in China,” a press release from IATA reads. “Furthermore, there is little sign of virus containment in many important emerging economies, which in combination with the US, represent around 40% of global air travel markets. Their continued closure, particularly to international travel, is a significant drag on recovery.”

The United States’ response to COVID-19 isn’t the only situation bringing airline recovery projections down. As corporations turn to virtual solutions for meetings and seminars, the critical business travel sector is expected to suffer. IATA projects companies will cut their travel budgets as they look to improve their margins beyond the pandemic.

Finally, weaker consumer confidence will also hurt the global airline industry. Although the trade organization says the demand for leisure travel is building, the lack of job security and unemployment benefits have would-be airline customers conserving cash for a rainy day.

Passenger traffic hit bottom in April, but the strength of the upturn has been very weak,” IATA director general and CEO Alexandre de Juniac said in a press release. “International markets remain largely closed. Consumer confidence is depressed and not helped by the UK’s weekend decision to impose a blanket quarantine on all travelers returning from Spain. And in many parts of the world infections are still rising. All of this points to a longer recovery period and more pain for the industry and the global economy.”

IATA Calls on Governments to Have a Stronger Response to COVID-19 Beyond Quarantines

If the aviation industry is to recover, the IATA says governments need to come up with better solutions than travel bans. Four airlines have already called upon both the U.S. government and European Commission to work out a plan to open borders to air travelers before the end of the year.

“Most countries are still closed to international arrivals or have imposed quarantines, that have the same effect as an outright lockdown,” de Juniac said in the press release. “Summer — our industry’s busiest season — is passing by rapidly; with little chance for an upswing in international air travel unless governments move quickly and decisively to find alternatives to border closures, confidence-destroying stop-start re-openings and demand-killing quarantine.”

In the latest European Commission closed border recommendation list, the United States was still excluded, alongside Brazil, Russia, and many other nations considered persona non grata. The trade bloc was joined by The Bahamas in closing borders to American travelers in July 2020.

View Comments (13)

13 Comments

  1. drvannostren

    July 28, 2020 at 2:17 pm

    Lets assume that the US continues to bungle this while everyone else kinda comes out the other side, whatever, in 4 months, 6 months, time line isn’t super important I don’t think.

    Does anyone think that opens up new possibilities for other airlines to take some share? Of course Americans make up a huge chunk of travelers, both leisure and business. But Air Canada for example I think loses 1,000s of passengers a year, myself included due to price sensitivity. United can offer me round trip to Bogota for like $700 when Air Canada might charge $850, both involve at least 1 stop, and flying domestically from YVR-YYZ is a quick way to ruin any mileage earning on a low fare economy ticket.

    Now, you’d still not have the US passengers that AC was trying to capture before, but is there an opportunity for them to take some market share by being the only game in town? Like anyone wanting to go from YVR/YYZ-Europe/Latin America/Asia…I mean sure the other carriers exist, but if the UK isn’t great, not much traffic from Latin America comes up here on its own anyway and the Asian carriers already had a share with AC. There’s a market of people like myself, who, if the price is reasonable and the borders are open etc and I just can’t transit the USA, I’d be happy to travel still. I don’t like flying through the US, nor do I dislike it, I do it because that’s just what we do. But if that changed, I wonder if it could be a kickstart to a quicker recovery for an airline like AC, or change the example to suit any other airline.

  2. jjmoore

    July 28, 2020 at 3:18 pm

    It is far easier to blame the real culprits:

    1) Democrat governors for forcing businesses to close (without any factual basis for doing so).
    2) Democrat governors (like Andrew Cuomo) for forcing Wuhan-virus patients into nursing homes (8000 died needlessly because of this in NY alone).
    3) China’s CCP and President Xi for allowing the virus to spread to the rest of the world.

    There is no containing something that is 50X more contagious than the seasonal flu. Masks won’t even come close to stopping it. Social distancing won’t stop it. The only thing that will put it to rest is herd immunity, and this will happen well before a vaccine is available. So… the economy can stay open, and we will develop herd immunity, or we can devastate the economy with shutdowns, and we will still develop herd immunity (it will take longer if we all hide).

    Don’t forget… unemployment and economic devastation brings on death as well. 37,000 people die as a result of each 1% increase in unemployment. We have increased by 12% since March… do the math.

  3. BMGRAHAM

    July 29, 2020 at 4:28 am

    The people in IATA clearly have little knowledge of how the USA is responding. The USA is doing the best it can, it’s a small percentage of reckless idiots that are giving us a bad name, and I’m not talking about government. Of course cases are going up when testing is going up. This is not the metric that should be used. Deaths the most important metric.

  4. cscasi

    July 29, 2020 at 6:28 am

    Who cares what IATA thinks. If China had mitigated the COVID issue before it was allowed to leave, the world would not be in the shape it is now. What’s IATA’s stance on China??? Another LIBERAL organization!

  5. Danwriter

    July 29, 2020 at 6:36 am

    The country that once led the world is now holding it back.

  6. edgewood49

    July 29, 2020 at 6:59 am

    Joe I might add that many of these counties you noted are now experiencing a resurgence in their infection rates, look at Hong Kong as a case in point that there is in fact second wave. I think we here in the US are still in our first wave but moving into a second one. Nothing is going to stop this until an effective vaccine is found, we can slow it but its not going anyway anytime soon.

    Keep up the great week Joe, in a crisis the cream always rises to the top.

  7. jenib

    July 29, 2020 at 8:16 am

    Why do Americans continue to make this a political issue and a blame issue instead of getting their people to understand it is a global health issue? Sadly, I cannot see travel to the US any time in the next 3 years or allowing any US people to visit where I live.

  8. DeltaFlyer123

    July 29, 2020 at 8:45 am

    The second factor in IATA’s analysis (corporations using virtual meetings) would have eventually become the dominant factor impacting travel, even without covid-19, as that is responsible for a large portion of global travel. Of course, without the pandemic, tourism would continue to rise due to people becoming more affluent, offsetting to some extent the reduction in business travel, so the exponential growth in travel would have leveled off even without the pandemic. Now would be a good time to plan for a lesser rate of increase in air travel than we’ve experienced in the past.
    Using reductio ad absurdum, the limit of air travel is reached when everyone on earth is on an airplane at the same time – as we approach that, the growth rate declines, much like water flowing out of a bucket with a hole near the bottom – as the bucket empties, the flow rate decreases in an inverse exponential fashion. To be honest, nearly 60 years ago, when I became interested in aviation, I would have expected to have reached that point years ago!

  9. tobegold

    July 29, 2020 at 8:49 am

    I get a laugh at some of the extremist comments made by some people in the US, no wonder the US is in such a mess. Covid 19 is not just a killer, many survivors are experiencing long term health complications, a recent report listed about 25% have developed serious heart, lung and/or other issues. The herd immunity approach failed – look at Sweden. only after an effective vaccine is available and the majority of the population is vaccinated will the pandemic end.

  10. edgewood49

    July 29, 2020 at 3:28 pm

    jenib canyon let us know which country you live in? I am not sure you’re correct in saying that Americans are the only ones making things political but then we are America and free. Having said that since YOUR making this political all one has to do is look at news coverage internationally to see few if any are non political when it comes to issues.

  11. BMGRAHAM

    July 31, 2020 at 4:27 am

    tobegold actually Sweden is now turning out to be a success story. Read the latest news. Their strategy was the right one.

  12. AJNEDC

    July 31, 2020 at 5:56 am

    The USA is just one country. People should fly elsewhere.

  13. KRSW

    July 31, 2020 at 7:21 am

    Nice to see IATA completely ignoring the second waves/spikes which are occurring in just about every country. Ask Germany, Australia, and just about any country in 2 weeks from now about this.

    Also no mention about how the US basically claims anyone who dies with a positive COVID test died BECAUSE of COVID, even if they died because of a motorcycle accident. No mention that the serology tests in the USA will give false positives if you’ve been exposed to common cold viruses in the past 12 months either. Ms. KRSW works for a large health insurer in the USA, after working at a large hospital for over a decade. The data has been very interesting to say the least, especially since US providers get a 20% bonus for treating anyone who tests positive for COVID per CMS guidelines. Broken arm? COVID. Got shot in Chicago? COVID. Tons of claims with doctors claiming “presumed positive” without doing the tests.

    Even if you IGNORE NY/NJ/MA’s decisions to send COVID patients into nursing homes which killed thousands, using ventilators inappropriately which caused thousands more deaths, and the claiming that everyone who ever dies has COVID, the US’ death rate is waaay down the list compared to most European countries.

    COVID Deaths per 1M population (as of 31 July 2020 from Worldometers):
    Belgium – 849
    UK – 677
    Spain – 608
    Italy – 581
    Sweden – 568
    USA – 469
    France – 463

    COVID Deaths per Million, US breakdown:
    New Jersey: 1789
    New York: 1684
    Massachusetts: 1247
    Connecticut: 1243

    Florida: 307
    Georgia: 346
    Texas: 231

    The numbers certainly look a lot different than what you hear the media talking about, don’t they?

    @tobegold: Vaccines work by the same principles as herd immunity. Even Faucci himself said that the best immunity is naturally-acquired immunity. If herd immunity doesn’t work, vaccines won’t work either.

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