The better performance was driven by gains in domestic markets, particularly China as international traffic remained largely restricted. Total domestic demand was down -32.3% versus pre-crisis levels (Mar-2019) and greatly improved over Feb-2021, when domestic traffic was down -51.2% versus the 2019 period. All markets except Brazil and India showed improvement compared to Feb-2021. Meanwhile, international passenger demand in Mar-2021 was still -87.8% below Mar-2019 – still it was a very small improvement from the -89.0% decline recorded in Feb-2021 versus two years ago.
The positive momentum in some key domestic markets in Mar-2021 is “an indication of the strong recovery we are anticipating in international markets as travel restrictions are lifted,” according to IATA’s new director general, former IAG CEO, Willie Walsh. “People want and need to fly. And we can be optimistic that they will do so when restrictions are removed,” he said.
China’s domestic market, the largest in the world with a 19.9% share of domestic traffic, was down just -2.9% in Mar-2021 compared to Mar-2019, according to the IATA performance data. Internal demand in the Russian Federation was actually up +8.5% versus Mar-2019, but all other major domestic markets performed worse than the average, most notably Japan where RPKs remain down more than half at -58.3% for the monthly year-on-year comparison (2021 versus 2019).
When it comes to international markets it is Africa that is performing the best, or perhaps the least worse. In Mar-2021, African airlines’ traffic sank -73.7% versus Mar-2019 and this was a slight deterioration compared to a -72.3% decline recorded in Feb-2021 compared to Feb-2019. All other regions of the world saw declines of more than -80%.
In Europe, where a COVID-19 wave caused further restrictions in 1Q 2021, Mar-2021 traffic was down -88.3% versus Mar-2019, slightly ahead of the -89.1% decline in Feb-2021 compared to the same month in 2019. The Asia Pacific region continues to lead the reductions with the steepest international traffic declines for a ninth consecutive month – international traffic was down -94.8% in Mar-2021 (versus Mar-2019), a small improvement on the -95.4% decline registered in February (2021 versus 2019).
The emergence of new COVID-19 variants and rising cases in some countries have been behind governments’ reluctance to lift travel restrictions and quarantine and slow roadmaps for recovery. However, Mr Walsh acknowledges that we are beginning to see positive developments, such as the recent announcement that vaccinated travellers from the US will be allowed to enter the European Union.
“At least 24 countries have already said they will welcome vaccinated travellers. We expect this to continue and gather momentum as vaccination numbers rise,” says Mr Walsh, but he warns governments should not rely only on vaccinations, as it “risks discriminating against those individuals who are unable to get a vaccine for medical or other reasons, or who lack access to vaccines”. Instead, he says, “affordable, timely and effective testing must be available as an alternative to vaccines in facilitating travel”.
Affordable is a particular important term here as an IATA sampling of costs for PCR tests (the test most frequently required by governments) in 16 countries showed wide variations by markets and within markets. Following the findings, IATA has called on governments to ensure that high costs for COVID-19 testing don’t put travel out of reach for individuals and families. “To facilitate an efficient restart of international travel, COVID-19 testing must be affordable as well as timely, widely available and effective,” it contends.
Of the 15 markets where there is a cost for PCR testing to the individual, IATA found the average minimum cost for testing was USD90, but the average maximum cost for testing was USD208. Even taking the average of the low-end costs, adding PCR testing to average airfares would dramatically increase the cost of flying for individuals.
Pre-crisis, the average one-way airline ticket, including taxes and charges, cost USD200, according to IATA 2019 data. “A USD90 PCR test raises the cost by 45% to USD290. Add another test on arrival and the one-way cost would leap by 90% to $380. Assuming that two tests are needed in each direction, the average cost for an individual return-trip could balloon from USD400 to USD760,” it highlights.
As travel restrictions are lifted in domestic markets, IATA’s Mar-2021 performance data shows a growing demand. “The same can be expected in international markets,” says Mr Walsh, but that could be “perilously compromised by testing costs—particularly PCR testing,” according to the Irishman.
“Raising the cost of any product this significantly will stifle demand,” he predicts, with the impact greatest for the short haul trips (up to 1,100 km) that will likely dominate the initial stage of the international recovery.
“With average fares of USD105, the tests will cost more than the flight,” acknowledges Mr Walsh. “That’s not what you want to propose to travellers as we emerge from this crisis. Testing costs must be better managed. That’s critical if governments want to save tourism and transport jobs; and avoid limiting travel freedoms to the wealthy.”
Among the markets surveyed, IATA says France represents the best practice. It bears the cost of testing, including tests to facilitate travel. The European Parliament is moving Europe in the right direction. Last week, it called for testing to be universal, accessible, timely and free-of-charge across the European Commission.
IATA’s new director general Willie Walsh is no stranger to industry challenges and just over a month into his tenure will be speaking exclusively to CAPA – Centre for Aviation chairman emeritus, Peter Harbison, during the May-2021 edition of CAPA Live on 12-May-2021.
Mr Walsh remains as passionate and out-spoken on industry matters and with IATA is focused on restoring the freedom of movement that airlines provide to billions of people around the world. As he said in an opening statement released by IATA on his appointment: “That means your freedom to visit friends and family, to meet critical business partners, to secure and retain vital contracts, and to explore our wonderful planet.”