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IATA International Air Transport Association : Air Passenger Monthly Analysis - June 2021

07/28/2021 | 09:54am EDT

Air Passenger Market Analysis

June 2021

Slow air travel recovery continued for another month

  • June was another month of modest gains in air travel. Industry-wide revenue passenger-kilometres (RPKs) fell by 60.1% compared with the pre-crisis June 2019 - an improvement on the 62.9% decline in May.
  • Global domestic RPKs continued to recover, however performance was mixed across the key domestic markets. Russia, the US and Brazil showed positive RPK developments, but air traffic deteriorated in China and Australia. Int'l traffic also sustained its moderate recovery, with all regions but Asia Pacific showing better outcomes vs. May.
  • Passenger's willingness to travel remains strong but elevated international travel restrictions and rising COVID cases in some regions represent a risk to further air travel rebound.

Global RPK contraction eased for another month

Slow air travel recovery continued in June amidst modest improvements in both domestic and international travel. Industry-wide revenue passenger- kilometres (RPKs) declined by 60.1% compared with the pre-crisis June 2019 - an uptick from the 62.9% contraction in May. In seasonally adjusted terms, RPKs continued to trend upwards (Chart 1).

Chart 1 - Air passenger volumes

Industry RPKs (billion per month)

900

800

Actual

700

600

500

Seasonally

adjusted

400

300

200

100

0

2016

2017

2018

2019

2020

2021

Sources: IATA Economics, IATA Monthly Statistics

expanding by a robust 33% compared with the pre- crisis period. Despite the surge in COVID cases and new restrictions in some areas, country's domestic air travel was largely unaffected in June. That said, some of the most popular tourist destinations such as Black Sea resorts recently started to implemented rules that will allow only vaccinated travelers, travelers with negative PCR tests or confirmed antibody tests to stay in hotels. This might weigh on passengers' willingness to travel in the coming months.

Chart 2 - Domestic RPK growth versus the same month in 2019, registration basis

Jun 2021

May 2021

Industry

-22.4%

-23.7%

Domestic Russia

33.0%

22.6%

Domestic China

-10.8%

6.3%

Domestic USA

-14.9%

-25.4%

Domestic Brazil

-31.1%

-44.0%

Dom. Australia

-40.7%

-34.7%

Domestic Japan

-67.6%

-68.0%

Domestic India

-70.8%

-73.8%

Mixed developments across key domestic markets

Aggregated domestic RPKs fell by 22.4% in June compared with the same period two years ago - a 1.4ppts smaller decline than in May (Chart 2). Performance across the key domestic markets was mixed reflecting pandemic developments and government restrictions. Russia was the best performer by far with domestic passenger volumes

Air passenger market overview - June 2021

-100%-80%-60%-40%-20% 0% 20% 40%

Domestic revenue passenger kilometres (% year-on-year) Sources: IATA Economics, IATA Monthly Statistics

Positive RPK developments were reported also in the US and Brazil domestic markets. In the former, passenger traffic reached 85% of the pre-crisis levels as life returns quickly back to normal with successful COVID vaccine rollout.

To aid understanding, the table includes both % comparisons with pre-crisis 2019 months and 2020 months.

World

June 2021 (% ch vs the same month in 2019)

June 2021 (% year-on-year)

share 1

RPK

ASK

PLF (%-pt)2

PLF (level)3

RPK

ASK PLF (%-pt)2

PLF (level)3

TOTAL MARKET

100.0%

-60.1%

-51.6%

-14.8%

69.6%

192.5%

145.6%

11.1%

69.6%

International

45.7%

-80.9%

-71.0%

-28.5%

55.2%

470.5%

327.0%

13.9%

55.2%

Domestic

54.3%

-22.4%

-15.5%

-6.9%

78.8%

140.2%

93.3%

15.4%

78.8%

1% of industry RPKs in 2020

2Change in load factor vs. the same month in 2019

3Load factor level

Air Passenger Market Analysis - June 2021

1

In Brazil, the pandemic is far from over but there has been a clear improvement in air travel demand compared with the previous month (-44.0% RPK fall in May vs. -31.1% decline in June). The recovery has been largely driven by positive vaccine progress in the country.

RPK outcomes in the remaining key domestic markets were less positive. Domestic China returned to contraction and RPK decline accelerated in Australia amidst new virus outbreaks and the resulting travel restrictions in both countries. The pandemic resurgence weighed also on passenger recovery in India and Japan - with both markets reporting RPKs only at ~30% of the pre-crisis levels. The start of the Olympic games in Tokyo would typically be associated with rising air traffic in July but since fans are not allowed to attend the event, the air travel boost will most likely be less significant compared to similar sport events in the past.

International air travel sustained its recovery in June

Global international air travel continued to recover in June, albeit slowly due to still elevated international restrictions that have been one of the key obstacles to faster air travel rebound (Chart 3). The measures have been the strictest in Asia Pacific where vaccination has been slow, and governments are risk-averse towards border openings to limit the spread of the virus. That being said, travel regulations remained elevated even in the regions with swift vaccine rollouts and more successful pandemic control, such as North America and Europe.

Chart 3 - Stringency of government international air travel measures by region

International travel stringency index weighted by population (Jan 2020 - Jun 2021)

4 - total border closure

3 - closed to

some regions

2 - quarantine

arrivals from high

risk regions

1 - screening

Central and South America

Asia-Pacific

Africa & Middle East

Europe

0 - no measures

North America

Source: IATA Economics analysis based on Oxford University data

Overall, the decline in industry-wide international RPKs eased to 80.9% in June 2021 vs. June 2019 (Chart 4). All regions with the exception of Asia Pacific

- where the travel restrictions remain the highest - contributed to this minor improvement. African airlines posted the smallest int'l RPK decline for another month (-68.2%) since cross-border travel regulations in the region are less strict compared with the other parts of the world.

Air Passenger Market Analysis - June 2021

Chart 4 - International RPK growth versus the same month in 2019 (airline region of registration basis)

Industry

-80.9%

Jun 2021

May 2021

-85.4%

Africa

-68.2%

-71.5%

L. America

-69.4%

-75.3%

N. America

-69.6%

-74.2%

Europe

-77.4%

-85.5%

Middle East

-79.4%

-81.3%

Asia Pacific

-94.6%

-94.5%

-100%-90%-80%-70%-60%-50%-40%-30%-20%-10% 0%

International revenue passenger kilometres (% year-on-year)

Sources: IATA Economics, IATA Monthly Statistics

Recovery in passenger capacity remains slow

Passenger capacity showed a small improvement vs. the previous month. Industry-wide available seat kilometers (ASKs) fell by 51.6% vs. June 2019, compared with a 54.1% decline in the same metric in May. At the regional level, North American airlines posted the smallest capacity fall (-29.6%) on the back of the recovering US domestic market. On the other hand, Middle Eastern airlines reported the weakest outcome, with ASKs down -62.9% vs. June 2019.

Chart 5 - Passenger load factors by region

Jun 2021

Jun 2019

All-time Jun low*

All-time Jun high*

Industry

69.6%

84.4%

N. America

80.6%

88.9%

L. America

78.4%

83.3%

Europe

65.8%

87.4%

Asia Pacific

65.7%

82.2%

Africa

58.7%

71.1%

Middle East

45.9%

76.4%

30% 40% 50% 60% 70% 80% 90%

Passenger load factors (% of available seat kms, actual)

Sources: IATA Economics, IATA Monthly Statistics

*Data from 1990 onwards

Although passenger load factors (PLF) recovered from the last year's record lows, they remained well below the pre-crisis levels in June. The industry-wide metric was at 69.6% - ~15ppts lower compared with the same month two years ago (Chart 5). Regions show some variation. PLFs in Latin America were hovering close to pre-pandemic levels and were also rebounding robustly in North America due improving demand in key domestic markets (Brazil and the US resp.). In the regions with high reliance on still muted international travel such as Africa and the Middle East, the load factors were the lowest this month. Overall, domestic load factors perform significantly better

2

compared with the international counterpart (78.8% vs. 55.2% in June).

emerging economies, the vaccine supplies remain tight, raising the risk of new outbreaks.

Economy is improving but COVID cases are rising

The drivers of air travel demand have been mixed. The latest global manufacturing and services PMI hovered above 50, indicating that the global economy continues to recover from the crisis, led by China and the US. This is good news because improving economic activity has been historically associated with healthy demand for air travel. Another positive development is the recovery in consumer confidence, which means that consumers are becoming less worried about their financial situation. A closer look into air travelers' confidence is also promising, indicating that there has been a strong demand to travel. The results of IATA's latest passenger survey

Chart 6: COVID cases

3500 New COVID19 cases per week (000's)

3000

2500

2000

1500

1000

500

0

May-20Jun-20Jul-20Aug-20Sep-20Oct-20Nov-20Dec-20Jan-21Feb-21Mar-21Apr-21May-21Jun-21Jul-21

Jan-20Feb-20Mar-20Apr-20

Source: ECDC

APAC

Europe

Latin America

Africa

Middle East

Nth. America

for June show nearly 60% of the respondents plan to take a flight within a month or two (Chart 6), and other 30% plan get on the plane within six months or so.

Chart 6: Survey data for air travel confidence

Returning to Travel After Containtment - June 2021

passenger survey

Nearly 60% of

37% respondents plans to fly within a month or two

28%

20%

12%

4%

Not wait at all Wait a month

Wait six

Wait a year or

Not returning

or two

months or so

so

to air travel

Source: IATA Passenger survey

However, despite the positive developments mentioned above, there are significant challenges ahead. The number of COVID-19 cases has been rising in many regions (Chart 6) amidst the spread of more contagious variants such as Delta variant. Global new cases are currently hovering around 3.5 million per week, while a month ago it was 1.5 million per week. New virus outbreaks have emerged recently even in countries where the pandemic seem to have been largely under control such as China and Australia. The resulting travel restrictions swiftly reversed positive demand and capacity developments in these countries, showing how fragile air travel recovery is amidst the pandemic uncertainty.

Another challenge is the still slow pace of vaccine rollout globally. Although administration of the vaccines has been gaining momentum in the US and Eurozone allowing markets to reopen, in many

Air Passenger Market Analysis - June 2021

Mixed developments in passenger bookings

Domestic and international bookings for future travel diverged in July (Chart 8). On domestic routes, net ticket sales continued to trend modestly upwards, driven largely by improvements in some of the key domestic markets such as the US where the metric is already hovering around pre-crisis levels. On the international side, bookings had been trending upwards until early-June but more recently the recovery has paused. The deterioration partly reflects the latest pandemic developments. Some countries have recently imposed new travel measures to limit the spread of new variants. As a result, the rise in summer bookings - an important source of revenues in the past - has stopped on some important routes. Looking forward, the spread of new variants and associated new lockdowns will remain the main risk for air travel recovery in the second half of the year.

Chart 8: Trends in passenger bookings (dom. vs. int'l)

Bookings, 7 days moving average Indexed at Jan, 20=100

140

120

100

Domestic

80

60

40

International

20

0

-20

Apr-20

Oct-20

Apr-21

Jan-20

Feb-20

Mar-20

May-20

Jun-20

Jul-20

Aug-20

Sep-20

Nov-20

Dec-20

Jan-21

Feb-21Mar-21

May-21Jun-21Jul-21

Booking Date

Source: IATA Economics using DDS

IATA Economics economics@iata.org28th July 2021

3

Air passenger market detail - June 2021

To aid understanding, the table includes both % comparisons with pre-crisis 2019 months and 2020 months.

World

June 2021 (% ch vs the same month in 2019)

June 2021 (% year-on-year)

share 1

RPK

ASK

PLF (%-pt)2

PLF (level)3

RPK

ASK

PLF (%-pt)2

PLF (level)3

TOTAL MARKET

100.0%

-60.1%

-51.6%

-14.8%

69.6%

192.5%

145.6%

11.1%

69.6%

Africa

1.9%

-66.6%

-59.5%

-12.4%

58.7%

1206.8%

632.0%

25.8%

58.7%

Asia Pacific

38.6%

-65.6%

-56.9%

-16.6%

65.7%

46.2%

43.8%

1.1%

65.7%

Europe

23.7%

-69.2%

-59.1%

-21.6%

65.8%

387.7%

291.9%

12.9%

65.8%

Latin America

5.7%

-50.2%

-47.1%

-4.8%

78.4%

449.7%

381.3%

9.8%

78.4%

Middle East

7.4%

-77.7%

-62.9%

-30.5%

45.9%

377.2%

267.7%

10.5%

45.9%

North America

22.7%

-36.2%

-29.6%

-8.3%

80.6%

351.2%

200.8%

26.9%

80.6%

International

45.7%

-80.9%

-71.0%

-28.5%

55.2%

470.5%

327.0%

13.9%

55.2%

Africa

1.6%

-68.2%

-60.0%

-14.5%

56.5%

1283.4%

605.9%

27.7%

56.5%

Asia Pacific

11.0%

-94.6%

-86.7%

-48.3%

33.1%

59.9%

100.3%

-8.4%

33.1%

Europe

18.5%

-77.4%

-67.3%

-27.1%

60.7%

584.5%

434.9%

13.3%

60.7%

Latin America

2.2%

-69.4%

-64.6%

-11.3%

72.7%

802.8%

714.0%

7.1%

72.7%

Middle East

7.0%

-79.4%

-65.3%

-31.1%

45.3%

405.9%

269.8%

12.2%

45.3%

North America

5.5%

-69.6%

-57.3%

-25.3%

62.6%

937.0%

483.1%

27.4%

62.6%

Domestic

54.3%

-22.4%

-15.5%

-6.9%

78.8%

140.2%

93.3%

15.4%

78.8%

Dom. Australia4

0.7%

-40.7%

-28.5%

-13.3%

65.0%

825.2%

713.0%

7.9%

65.0%

Domestic Brazil4

1.6%

-31.1%

-30.4%

-0.9%

80.9%

355.5%

319.7%

6.4%

80.9%

Dom. China P.R.4

19.9%

-10.8%

-0.8%

-8.6%

76.2%

40.5%

28.2%

6.7%

76.2%

Domestic India4

2.1%

-70.8%

-59.1%

-25.8%

63.8%

71.4%

61.3%

3.7%

63.8%

Domestic Japan4

1.5%

-67.6%

-45.1%

-29.2%

42.0%

28.9%

48.6%

-6.4%

42.0%

Dom. Russian Fed.4

3.4%

33.0%

39.4%

-4.0%

81.3%

216.2%

119.1%

25.0%

81.3%

Domestic US4

16.6%

-14.9%

-11.2%

-3.8%

85.9%

312.2%

169.1%

29.8%

85.9%

1% of industry RPKs in 2020

2Change in load factor vs. the same month in 2019

3Load factor level

4 Note: the seven domestic passenger markets for which broken-down data are available account for approximately 46% of global total RPKs and 84% of total domestic RPKs

Note: The total industry and regional growth rates are based on a constant sample of airlines combining reported data and estimates for missing observations. Airline traffic is allocated according to the region in which the carrier is registrated; it should not be considered as regional traffic.

Year-to-date developments (Jan.-June 2021 vs Jan.-June 2019)

Year-to-date (% ch vs the same period in 2019)

RPK

ASK

PLF (%-pt)2

PLF (level)3

TOTAL MARKET

-66.7%

-56.4%

-19.4%

62.6%

Africa

-70.1%

-60.8%

-17.0%

54.1%

Asia Pacific

-65.0%

-55.5%

-17.6%

64.2%

Europe

-78.1%

-69.2%

-24.1%

59.7%

Latin America

-59.4%

-54.1%

-9.6%

72.8%

Middle East

-80.2%

-64.4%

-33.4%

41.7%

North America

-52.1%

-39.3%

-17.8%

66.6%

1% of industry RPKs in 2020

2Change in load factor vs same period in 2019

3Load factor level

Year-to-date (% ch vs the same period in 2019)

RPK

ASK

PLF (%-pt)2

PLF (level)3

Domestic

-33.1%

-22.4%

-11.5%

71.8%

Dom. Australia

-47.5%

-38.3%

-11.7%

66.7%

Domestic Brazil

-42.4%

-39.2%

-4.3%

77.9%

Dom. China P.R.

-14.6%

-2.6%

-10.5%

74.3%

Domestic India

-48.8%

-31.5%

-22.2%

66.0%

Domestic Japan

-65.6%

-44.1%

-27.4%

43.9%

Dom. Russian Fed.

15.6%

14.4%

0.8%

80.9%

Domestic US

-37.3%

-26.1%

-12.9%

72.3%

1% of industry RPKs in 2020

2Change in load factor vs same period in 2019

3Load factor level

Year-to-date (% ch vs the same period in 2019)

RPK

ASK

PLF (%-pt)2

PLF (level)3

International

-85.8%

-75.3%

-34.8%

46.5%

Africa

-71.6%

-60.9%

-19.2%

51.3%

Asia Pacific

-94.7%

-86.8%

-48.7%

32.1%

Europe

-84.8%

-75.6%

-32.0%

52.4%

Latin America

-78.3%

-71.9%

-19.0%

63.8%

Middle East

-81.7%

-66.3%

-34.4%

40.7%

North America

-77.0%

-60.6%

-34.7%

48.4%

1% of industry RPKs in 2020

2Change in load factor vs same period in 2019

3Load factor level

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Terms and Conditions for the use of this IATA Economics Report and its contents can be found here: www.iata.org/economics-termsBy using this IATA Economics Report and its contents in any manner, you agree that the IATA Economics Report Terms and Conditions apply to you and agree to abide by them. If you do not accept these Terms and Conditions, do not use this report.

Statistics compiled by IATA Economics used direct airline reporting complemented by estimates, including the use of FlightRadar24 data provided under license.

Air Passenger Market Analysis - June 2021 4

Disclaimer

IATA - International Air Transport Association published this content on 28 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2021 13:53:08 UTC.


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