IATA: Passenger Demand Recovery Continued in 2021 but Omicron Having Impact;

The International Air Transport Association (IATA) announced full-year global passenger traffic results for 2021 showing that demand (revenue passenger kilometers or RPKs) fell by 58.4% compared to the full year of 2019. This represented an improvement compared to 2020, when full year RPKs were down 65.8% versus 2019. 

Because comparisons between 2021 and 2020 results are distorted by the extraordinary impact of COVID-19, unless otherwise noted all comparisons are to the respective 2019 period, which followed a normal demand pattern.
 

• International passenger demand in 2021 was 75.5% below 2019 levels. Capacity, (measured in available seat kilometers or ASKs) declined 65.3% and load factor fell 24.0 percentage points to 58.0%.
   
• Domestic demand in 2021 was down 28.2% compared to 2019. Capacity contracted by 19.2% and load factor dropped 9.3 percentage points to 74.3%.
   
• Total traffic for the month of December 2021 was 45.1% below the same month in 2019, improved from the 47.0% contraction in November, as monthly demand continued to recover despite concerns over Omicron. Capacity was down 37.6% and load factor fell 9.8 percentage points to 72.3%.

Impact of Omicron Measures: Omicron travel restrictions slowed the recovery in international demand by about two weeks in December. International demand has been recovering at a pace of about four percentage points/month compared to 2019. Without Omicron, we would have expected international demand for the month of December to improve to around 56.5% below 2019 levels. Instead, volumes rose marginally to 58.4% below 2019 from -60.5% in November. 

“Overall travel demand strengthened in 2021. That trend continued into December despite travel restrictions in the face of Omicron. That says a lot about the strength of passenger confidence and the desire to travel. The challenge for 2022 is to reinforce that confidence by normalizing travel. While international travel remains far from normal in many parts of the world, there is momentum in the right direction. Last week, France and Switzerland announced significant easing of measures. And yesterday the UK removed all testing requirements for vaccinated travelers. We hope others will follow their important lead, particularly in Asia where several key markets remain in virtual isolation,” said Willie Walsh, IATA’s Director General. 

AIR FREIGHT

The International Air Transport Association (IATA) released data for global air freight markets showing that full-year demand for air cargo increased by 6.9% in 2021, compared to 2019 (pre-covid levels) and 18.7% compared to 2020 following a strong performance in December 2021. This was the second biggest improvement in year-on-year demand since IATA started to monitor cargo performance in 1990 (behind 2010’s 20.6% gain), outpacing the 9.8% rise in global goods trade by 8.9 percentage points.

As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted, all comparisons below are to 2019 which followed a normal demand pattern.

• Global demand in 2021, measured in cargo tonne-kilometers (CTKs*), was up 6.9 % compared to 2019 (7.4% for international operations). 
   
• Capacity in 2021, measured in available cargo tonne-kilometers (ACTKs), was 10.9% below 2019 (12.8% for international operations). Capacity remains constrained with bottlenecks at key hubs. 
   
• Improvements were demonstrated in December; global demand was 8.9% above 2019 levels (9.4% for international operations).  This was a significant improvement from the 3.9% increase in November and the best performance since April 2021 (11.4%). Global capacity was 4.7% below 2019 levels (‑6.5% for international operations). 
   
• The lack of available capacity contributed to increased yields and revenues, providing support to airlines and some long-haul passenger services in the face of collapsed passenger revenues. In December 2021, rates were almost 150% above 2019 levels(i). 
   
• Economic conditions continue to support air cargo growth. 
  
  • Global goods trade rose 7.7% in November (latest month of data), compared to pre-crisis levels. Global industrial production was up 4.0% over the same period. 
     
  • The inventory-to-sales ratio remains low. This is positive for air cargo as manufacturers turn to air cargo to rapidly meet demand. 
     
  • The cost-competitiveness of air cargo relative to that of sea-container shipping remains favorable.
     
  • The recent surge in COVID-19 cases in many advanced economies has created strong demand for PPE shipments, which are usually carried by air.
     
• Supply chain issues that slowed the pace of growth in November remain as headwinds:
  
  • Labor shortages, partly due to employees being in quarantine, insufficient storage space at some airports and processing backlogs continue to put pressure on supply chains.  
     
  • The December global Supplier Delivery Time Purchasing Managers Index (PMI) was at 38. While values below 50 are normally favorable for air cargo, in current conditions it points to delivery times lengthening because of supply bottlenecks. 

“Air cargo had a stellar year in 2021. For many airlines, it provided a vital source of revenue as passenger demand remained in the doldrums due to COVID-19 travel restrictions. Growth opportunities, however, were lost due to the pressures of labor shortages and constraints across the logistics system. Overall, economic conditions do point towards a strong 2022,” said Willie Walsh, IATA’s Director General.

Read the full reports:
December Passenger Report: https://www.iata.org/en/iata-repository/publications/economic-reports/air-passenger-monthly-analysis---december-2021/

December Air Freight Report: https://www.iata.org/en/iata-repository/publications/economic-reports/air-freight-monthly-analysis---december-2021/