Airlines face a prolonged upward rise before air travel demand recovers to pre-pandemic levels, because the number of passengers is likely to remain below last year’s level until 2023, S&P Global Ratings has suggested in a new report.
The rating agency predicts a “swoosh-shaped” recovery where, after falling by 55% this year compared to 2019, the number of passengers will gradually creep back to pre-coronavirus levels at some point by 2023.
S&P anticipates a much sharper decline in 2020 passengers compared to a few months ago. The agency in March predicted a decline of 20-30% this year, but in a report published on May 28 revised this figure to 50-55%. This has also been extended for one year for the expected recovery of requests to take.
“This will be a much longer recovery than the rebound that was observed afterwards [the] The 9/11 terror attacks, the 2003 SARS pandemic, and the 2008/2009 global financial crisis, “the report said.
European air traffic will be the worst affected, according to S&P predictions. Recovery for all regions will depend on factors such as passenger confidence and whether there is a second wave of Covid-19 outbreaks which results in further locking up.
“Now that the peak of the spread of the virus seems to have passed in many countries, some governments are trying to slowly and selectively open their borders,” the report notes. “The road to air traffic recovery will depend not only on the speed of opening this border, but also on the airline’s fleet capacity and route planning, passenger demand, and the economic burden resulting from the severity of the coronavirus pandemic.”
Despite the slow road to recovery, the S&P long-term forecast for the aviation industry is more positive.
“In the long run, we believe that air travel will eventually return when current health and safety issues have been meaningfully addressed by the industry, and consumer confidence has increased, supported by a historically stable growth rate in air traffic of 4-5% per year, “said the agency.
However, it warned that wider adoption of long distance work during locking “could have a long-lasting impact on business travel, which has become a more profitable passenger segment for airlines”.
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