Air Passenger Forecasts: 2020 Falls, Expected Recovery and Long … · 2020. 4. 25. · Global lockdowns are having a very large impact on economy and travel. 60. 100. Present. Past

April 2020

Air Passenger Forecasts:2020 Falls, Expected Recovery and Long-RunOpportunities

David Goodger Managing Director, EMEA Tourism [email protected]

Andrew Matters Deputy Chief Economist [email protected]

mailto:[email protected]


Global lockdowns are having a very large impact on economy and travel

60 100

Present

Past

China Italy Spain France GermanyUS (specific states) UKIndiaAustralia Japan Other

Global lockdowns

0 20 40Source : Oxford Economics/Haver Analytics

80% of global GDP

16%

63%

Source: IATA Economics using FlightRadar24 data

Questions: Use the question panel on the right

Immediate economic impact will be greater than during GFC

2

4Non-China EM q/q contribution (RHS)China q/q contribution (RHS)Advanced economies q/q contribution (RHS)Global % quarter (LHS)

0

-2

-4

-6

-82004 2006 2008 2010 2012 2014 2016 2018 2020

Source : Oxford Economics/Haver Analytics

World: GDP% quarter Forecast


Policy stimulus is providing vital support for recovery

-1.5

-2.0

-1.0

2.0

1.5

1.0

0.5

0.0

-0.5

2.5

2000 2005 2010 2015 2020

Advanced Economies Emerging Markets World


Global: Fiscal impulsePpts of potential GDP

Forecast


Expected growth in recovery but impacts will be felt into the medium term

2020 2021 2022

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

Global US Eurozone China

2019Source: Oxford Economics

2022 GDP relative to pre-recession trend

Global GDP OutlookAnnual growth, %


Travel will fall more sharply than the wider economy

2022 2023-60%

-40%

-20%

0%

20%

40%

60% Total International Domestic

2020 2021

Source: IATA, Tourism Economics

Global Air Passenger GrowthAnnual growth, %

2022 2-60%

-40%

-20%

0%

20%

40%

60%

2020 2021



Global Air Passengers Relative to 2019 LevelsAnnual growth, %

The dramatic fall in the number of flights has occurred across all regions

Source: IATAusingFlightRadar24 data


The typical airline had 2mths of cash available at the start of the year

Source: IATA, The AirlineAnalyst


Outside the top-30 airlines, debt levels remain high

Source: IATA


The usual v-shape recovery didn’t involve a global recession

120110100

908070605040302010

-3 -2 -1 0 1 8 9 10 11 12

Impact of past disease outbreaks on aviationIn

dex

(cris

ism

onth

=100

)

2 3 4 5 6 7Months before and after the start of the crisis

SARS(2003)AsiaPacific Airlines RPKs

AvianFlu (2013)AsiaPacific Airlines RPKs

MERS Flu (2015)RPKsto, from and within South Korea

AvianFlu (2005)RPKsto, from and within South-EastAsia

SARS(2003)NorthAmerican Airlines RPKs

SARS(2003)China DomesticMarket RPKs

Source: IATA


Restoring passenger confidence will be crucial

22%

45%

23%

7%3%

14%

47%

28%

8%4%

50%45%40%35%30%25%20%15%10%

5%0%

Not wait at all Wait a month or two Wait six months or so Wait a year or so Not travel for the foreseeable future

Returning to Travel After ContainmentAnnouncement

February Survey AprilSurveySource: IATA


Downside risk from larger and longer lockdown disruption

105

100

95

90

85

110

115

120

t-4 t t+4 t+8 t+12 t+16

Great Financial Crisis (GFC)Pre-GFC baseline (Jan 2008) Current baselinePre-coronavirus baseline (Jan 2020)Downside scenario


Global: comparing the forecast and GFCIndex (quarter prior to recession, t=100)


Oct Nov Dec0%

2%

4%

6%

8%

10%

12%

14%

16%

MEAN America

Europe APAC

Latin America

Jan Feb Mar Apr May Jun Jul Aug Sep

Global arrivals: average monthly seasonality%share annual arrivals,2013-18

Expected impacts in 2020 will be affected by duration and seasonality

• Extent of restrictions into H2 will influence 2020 performance, aswell as sentiment and economic drivers.

• Current travel restrictions are expectedto remain foraround 4 months.

• Some easing of restrictions for domestic and short-haul travel is expected to begin for peak summermonths.

• Second wave of outbreakand lockdowns are a key risk.

Source: UNWTO, Tourism Economics

Shading is expected duration of travel restrictions:dark shading is current restrictions, lighter is some easing


Downside scenario from economic drivers and reduced propensity to travel

2022 2023-60%

-40%

-20%

0%

20%

40%Baseline Downside

2020 2021

Source: IATA, TourismEconomics

Global Air Passenger Downside ScenarioAnnual growth, %

2020 2021 2022 2023-60%

-40%

-20%

0%

20%

40%


Global Air Passenger Scenarios Relative to 2019LevelsAnnual growth, %

Baseline Downside

Cumulative loss over 5 years: 1.6bn passenger journeys

Pre-crisis level recovered a full year later (2023 vs 2022).


Regional profiles are similar with AsPac & AME recovering quickest…

Source: IATA/TourismEconomicsQuestions: Use the question panel on the right

The long-run outlook remains robust…


…with Asia Pacific continuing to lead the way

North America522m2.2%

Latin America365m3.4%

Europe636m2.2%

Middle East 274m4.4%

Africa209m4.4%

Asia Pacific2,725m

5.0%


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Air Passenger Forecasts: 2020 Falls, Expected Recovery and Long … · 2020. 4. 25. · Global lockdowns are having a very large impact on economy and travel. 60. 100. Present. Past