While the global air travel industry has partially recovered from its April low, air travel demand remains about 50% below pre-pandemic levels.
The crisis in demand continues through the summer end. Travelers are staying home, as the industry remains paralyzed. Governments across the world have reopened economies, adding to the surge in air travel over the last three months, though the recovery shape doesn’t resemble a “V” but rather a “Nike Swoosh.”
Now COVID-19 cases and deaths are surging in the US, Europe, and other regions of the world, forcing governments to re-imposing quarantines doesn’t give travelers confidence to fly this fall.
To shed more color on where airlines are headed, John Grant, chief analyst at OAG, and Scott McCartney, an aviation expert and travel editor at The Wall Street Journal, discussed Tuesday, during a webinar, the dire situation airlines face through 2021.
Grant said airline’s year-end capacity offered could be in the range of -8% to -50%, with “a best-case scenario” that would be around -50% given depressed industry conditions. He said capacity could around -55%.
Bloomberg summarizes the 45-minute webinar between Grant and McCartney – the biggest takeaway is that airlines will need more cash through summer 2021, airline suppliers will be hit hard, and more job losses industrywide:
The situation for customers and airlines alike is very frustrating when quarantine requirements change on a weekly basis, forcing airlines to build flexibility into tickets and offer booking-change options
Many airlines will need a lot more cash to see them through summer 2021 and these discussions are ongoing
Chapter 11 is often devastating for airline suppliers, while the airline itself often goes out in good shape
We will inevitably see more job losses
In a separate interview, Grant on Wednesday (Sept. 2) said airlines underwent “dramatic capacity cuts” in the last week.
Slow progress getting back to 2019 flights ✈️
> Globally, scheduled flights are down by 47% compared to the same week last year
> Seats are at 58.4m having peaked in the summer at 60.0m in week 3-9 Aug
“Dramatic capacity cuts in the last week” – John Grant#OAGwebinar
— OAG (@OAG_Aviation) September 2, 2020
Scheduled flights across the world were halved through the end of August.
Grant said more seat capacity would be removed.
Airlines have announced 190,000 job cuts this year. United Airlines leads all global carriers in the total number of cuts announced. On Wednesday, United said it will furlough 16,370 workers on Oct. 1. Just days before that, American Airlines said it would need another round of bailouts or it would have to slash 19,000 workers.