Holiday Travel, Vaccine News and Brighter Skies Ahead as Passenger Numbers Increase
Despite the pandemic’s continued grip on the world, air travel is improving. As the month of November closed, the Transportation Security Administration (TSA) reported that passenger numbers were at their highest since COVID-19 virtually wiped out air travel. For the three days covering America’s Thanksgiving holiday period, November 26th -28th, almost three million individuals ignored the Centers for Disease Control’s (CDC’s) pleading for them to stay home and headed to airports to celebrate with their families. One can wonder if there will be a similar pattern for the Christmas, Hannukah, Kwanza and New Year holidays.
News of a vaccine coming from three separate drug manufacturers gives reason for optimism, but air travel still has a long way to go to catch up to its previous numbers. In fact, as the virus is now surging in several states across the U.S., airlines such as Alaska Airlines, American Airlines, Southwest Airlines and United Airlines all reported an impact on their bookings, including an increase in cancellations. It is important to note that airlines are continuing their flexible, no-fee air travel change and cancellation policies specifically to accommodate pandemic-related circumstances.
Re-Open Europe Guided by Color-Coded COVID-19 Map
Across the Atlantic, precaution is the operative word as the European Union (EU) looks to restart international travel with a “traffic light” system. Its Re-Open Europe initiative is accompanied by a color-coded map on its Re-Open Europe website advising travels as to the COVID-19 risk levels in different regions. This information is coming directly from the European Centre for Disease Prevention and Control (ECDC). A system using green, orange, red or grey is based on the 14-day cumulative incidence rate (i.e., the number of newly identified cases per 100,000 people), testing rate and positive test rates.
Under the Re-Open Europe initiative, the EU has indicated it would not issue any travel restrictions, quarantines or testing for people coming from green areas which have a cumulative incidence rate of less than 25 and test positivity rate of less than 4 percent. At this writing, there were no green regions in Europe, which was largely covered in red with the exceptions being Norway, Finland, and parts of Greece, which were in the orange zones. Red zones have a cumulative incidence rate of 50 or more and a test positivity rate of 4 percent or more, or a cumulative incidence rate of over 150. Orange zones are those areas in the cumulative incidence rate is less than 50, but the test positivity rate is 4 percent or higher, or if the rate ranges from 25 – 150, but the test positivity rate is less than 4 percent. The use of grey for some regions indicates a lack of sufficient data or a testing rate of lower than 300 per 100,000 people.
The United Kingdom is also represented on the Re-Open Europe map until the Brexit Transition period concludes on December 31st, 2020, however, lockdown restrictions will continue applying for all non-essential travel. At least one UK nation noted its reception to that policy. The Republic of Ireland stated that, “all passengers entering Ireland from red, orange and grey region are requested to restrict their movements for 14 days.” That sentiment was echoed by Aer Lingus which cited the traffic light system as a way to help boost customer confidence for 2021 travel.
IATA’s Latest Air Cargo Forecast is Reason for Optimism
An unexpected year-end gift came from IATA’s latest market forecast. It projected air cargo volume will return to near 2019 levels next year. IATA noted that air cargo should play a major role in vaccine distribution driving cargo volumes to 61.2m tons; also identical to the 61.3 tons carried in 2019.
In addition to citing air cargo’s role in vaccine distribution, IATA noted the slow reintroduction of belly capacity from passenger services, along with a higher proportion of temperature-sensitive cargo which is expected to increase a 5% increase in yields.
As for cargo revenues, historic highs are expected, reaching $139.8 billion; up from 117.7 billion in 2020 and $102.4 billion in 2019. According to IATA’s data, in 2020, overall cargo capacity decreased by 24%, with belly capacity down 45% and yields increased by 30%.
While unquestionably, 2020 will go down as the airline industry’s worst financial year, with a record net loss of $118.5 billion in 2020, and a projected loss of $38.7 in 2021, IATA is projecting the fourth quarter of 2021 to be a profitable one for some of the airlines.