Weakening of China domestic market ‘poses a risk’ to travel recovery, but US domestic bookings are now near to pre-pandemic levels

The strong forecast sentiment for travel has translated into the return of traffic, in domestic markets at least, where the removal of restrictions has permitted mobility. There are even positive signs on the return of business travel with the slow removal of international restrictions now also allowing foreign visits. While the majority of these remain for leisure purposes there is increasing evidence that business travel rates are on the rise.

The most recent monthly analysis by airline body International Air Transport Association (IATA) covering Jun-2021 showed that global domestic RPKs continued to recover, but with the now expected mixed regional performance. While domestic traffic weakened in China and Australia, traffic in Russia, the US and Brazil continued to trend upwards during the month.

However, we have learnt that COVID is resilient and since then the global number of COVID cases has again been rising and resulted in a renewal of strict travel restrictions in some countries, especially across the Asia Pacific region, where air travel has been hit the hardest.

IATA has highlighted the impact of the continued evolution and lifecycle of the global health pandemic by adding preliminary booking data for Jul-2021 and Aug-2021 to the confirmed 1H 2021 performance metrics to chart the expected course of domestic market traffic globally and in some of major domestic markets.

What it shows is that differing experiences in the world's two largest aviation markets will continue to impact global performance. Air traffic in China domestic market, which had a swift recovery after the end of lockdowns in Mar-2021,experienced a sharp fall in Aug-2021. In the United States though, bookings for Jul-2021 and Aug-2021 travel indicate that traffic in the US domestic air travel market has now reached circa 95% of pre-crisis levels.

This is just a snapshot in time, but tells the story of two nations currently facing very different circumstances in their ongoing fight against a virus that continues to severely impact how we live our lives.

China has imposed strict domestic travel restrictions amid a growing spread of the Delta variant of coronavirus, delivering a setback in domestic traffic in China domestic market that is similar to the one experienced during the Chinese New Year in Feb-2021. IATA warns this weakening of the Chinese domestic market "poses a risk to the recovery".

Meanwhile, right now the US is experiencing much stronger recovery as high vaccination rates in the country balance the impact of Delta variant on air travel - a story that is also evident in India, another of the world's leading domestic air markets.

In India, IATA data shows domestic travel has bounced back quickly following the ease of travel restrictions in the country Booking data for the latest two months now indicates that the domestic market in India will have already reverted to Apr-2021 levels as of Aug-2021 thanks to the easing of travel restrictions.

What we learn from this latest data reinforces the need to take a micro-examination of performance rather than a global perspective. While the outlook now appears a little more encouraging and we should be celebrating the US domestic market almost reaching pre-pandemic traffic levels, we are instead staring down a likely decline in global domestic traffic in Aug-2021, due ultimately to the substantial scale of China's domestic market (around a third of global domestic travel).