Europe continues to suffer from depressed demand

Europe continues to suffer from depressed demand
Europe continues to suffer from depressed demand

International Air Transport Association (IATA) estimates for air travel in Europe indicate a further deterioration in revenues, job prospects, and economic activity across the entire continent.

In 2021, Europe is expected to be the worst-hit global region in terms of airline losses (-$11.9 billion) and EBIT margin (-9.5%). Passenger traffic (measured in revenue passenger km, RPK) is estimated to have fallen 70% this year, the worst performance of any region with the exceptions of Africa (-72%) and the Middle East (-73%). RPK growth next year is expected to be a weak 47.5%, trailing the comparable regions of Asia Pacific (50%) and North America (60.5%).

“Our projections for this year and next are little short of a disaster for European air transport,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe. “Border restrictions and quarantine measures have brought demand to a halt. There is optimism over a vaccine, but as our forecast for next year shows, this is unlikely to come in time to prevent hundreds of thousands more job losses in the industry unless governments take immediate action. The focus must remain on rapid testing of passengers so that quarantine can be eliminated, and borders safely opened.”

The impact of travel restrictions and quarantine on travel demand is clear. Across Europe, more than seven million jobs have been lost or are at imminent risk due to the COVID-19 shutdown. Intra-EU bookings are 81% down for the period to 10 January 2021 compared with the usual curve. Economic recovery will be hampered by the loss of connectivity that is being felt by European cities. Since 2019, total connectivity has declined 68% in Frankfurt, 67% in London, 67% in Paris, 66% in Istanbul, 64% in Moscow, and 53% in Amsterdam.

“We see hope in vaccines, but mass inoculation is still a long way off, so European governments and the European Commission must act quickly to help preserve what remains of the continent’s aviation industry and air transport network,” said Schvartzman.

“Two priorities stand out at this time. First, remove quarantine restrictions by introducing rapid COVID-19 testing of air passengers. The latest guidance from EASA and ECDC confirms that quarantine is ineffective in the present circumstances. And second, quickly agree a revised slot regulation in line with the joint industry recommendations to preserve air routes and competition. People are desperate to visit far flung families this winter. Businesses are desperate for travelers and trade. And we are all desperate for action from governments to safely restore the freedom to travel.”

January 27, 2021