Air Passenger Forecasts: Looking beyond the current crisis
The pandemic acted as a near-complete brake on travel in 2020 and the first quarter of 2021is also looking very weak with the rise in covid-19 cases necessitating further travel restrictions.
However, the outlook is not all bleak, with the rapid rollout of vaccines and travel corridors (and vaccine passports) being considered, we take a look at the forecast in passenger flows using data and research conducted by IATA along with the Oxford Economics Research company.
Data from travel bookings and an annoying surge in social media posts from influencers :) demonstrates a strong pent up demand for travel when relaxation in travel restrictions permit i.e. the removal of quarantine requirements.
For example, in November travel to the UAE doubled in a two week period when the travel corridors were open. However it contracted just as fast and demonstrated the sensitivity (of travel) to shocks and restrictions, with the bookings declining rapidly when the new COVID-19 variant emerged in the UK and the corridor closed.
The positive progress that advanced economies are experiencing with their vaccine rollout programmes will most likely lead to a surge in domestic air travel, however international air travel will require a global solution to the current uneven distribution in vaccines, as developing economies are moving at a much slower pace in their vaccination strategies and this will result in continued boarder restrictions.
The data below shows that those major markets which have a strong history of domestic air travel fully recovered (to 2019 passenger numbers) when conditions allowed in 2020 - Examples include Russia and China, with some dips, falling back with the reemergence of covid-19 - but this does demonstrate the demand is there, indicating a realistic chance that domestic travel can experience a fast and strong recovery pattern
International travel does however present a different set of challenges - requiring "International Travel Bubbles and Air Corridors" to support traveller confidence.
As you can see form the graph below, Year-On-Year bookings are down considerably and it is looking like a very difficult first quarter for 2021 as a result of the resurgence of the virus and widespread travel restrictions being imposed.
Clearly there are lots moving parts that influence the outlook, what is not absolutely clear (as yet) is how effective the vaccine will be against the new variants and if herd immunity will take longer than anticipated.
What is clear is there will be a strong domestic travel rebound as vaccination programmes start to make a difference, leaving international travel restrictions as the key limiting factor. Governments are more reluctant to open boarders to inbound travel, making domestic travel more viable via the pent up demand.
The current levels of optimism are not unfounded, with strong economic forecast across key markets that is driving the positivity within the travel sector.
It is expected that leisure travel will lead the way within domestic flights when restrictions ease - it is anticipated that these figures will return first to 2019 passenger number figures by 2022. Business travel we do see as lagging - returning to 2019 passenger numbers by 2024 - as corporates reduce travel budgets and apply much stricter "duty of care" to their employees and will view international business travel with risk (in the short term).
Finally, it is expected that passenger flows will follow a similar pattern across all the regions, with phased recovery - a mix of travel types, markets and destinations.
You can see Europe lagging because of it's high dependency on international travel. Markets with high domestic market will recover faster,
International flows are most at risk with lingering boarder and travel restrictions and less effective vaccines - markets with higher domestic travel reliance are least exposed to the downside, with more rapid recovery in North America and India for example with high domestic traffic flows.
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