Aviation Sector's Growth to Lag for Years, Says Report

The outbreak of covid-19 has resulted in the downtrodden business confidence in the air transport sector, the most distressed amongst the transport sector, and expected to lag for several years, according to the IATA report.

The IATA charts show a slow revival until 2022, stemming the industry to burn through cash at a lesser rate, around $5 to $6 billion/month in 2021. As the global demand falls by 50 per cent, the loss incurred worldwide estimates to $84.3 billion. Flights operated have reduced to 1.52 million from 3.14 million over the year as of August 2020.

"The crisis is growing longer and deeper than anybody could have imagined. The months ahead are traditionally the weakest for airlines. Normally they survive on the cash cushion from the busy peak travel period in July and August. We did not get that boost this year,", said Alexandre de Juniac, IATA's DG and CEO, during his last teleconference.

The year-over-year recorded RPKs (Revenue passenger kilometres) show a 92.5 per cent fall in the Middle East for the sector. RPK is an airline industry metric depicting the number of kilometres travelled per paying passengers.

"This crisis is the worst ever met in the history of the aviation industry. Travel restrictions and closing the airport made many airlines to cancel their routing. Since passengers are not ready to travel, airlines and airport forced to lay off employees. It affected International, domestic, Cargo flights and airports, and has caused a huge revenue loss", says Ameer Thayyil, a prominent travel agency owner based in the UAE, who has been in the field for the past 38 years.

The major challenge is to downsize enough costs, but due to obvious operating costs such as maintenance costs and labour costs, can only be brought down to 50%. The international demand for Middle East region shows a slight improvement in the sector since the April crisis.