IATA urges states to back airlines as outlook darkens

IATA is warning states will have to dig deeper over the coming months to support struggling airlines as travel restrictions continue to tighten in response to new strains of the Covid virus. While airlines entered the year with optimism, the roll-out of vaccines meant a recovery in air travel demand may be in sight, this has been tempered by a series of moves by states to curtail travel as a number of more contagious Covid strains emerged. ”I think the short-term outlook has certainly darkened,” acknowledged IATA chief economist Brian Pearce. ”The critical time will be the summer season, because that is when airlines make most of their money. This is the seasonally low-time of year for travel. The vaccine should make all the difference, so the second half of the year should be and feel very different to what it’s feeling like now. So we are hoping this is the dark before the dawn.” While the heightened restrictions are further impacting travel demand, Pearce says the association already had a “very conservative” forecast under which it expects traffic this year to be around half 2019 levels. However he adds: ”What we have also seen is airlines getting very low yields on passengers, partly because they have been pricing to try to stimulate demand….so revenues have been worse than the passenger [traffic] situation. So we will be looking at that closely when we come to update our outlook on cash burn, which is clearly going to be very significant in the first part of this year.”<br/>