Airline Recovery Will Finally Gain Traction by Mid-Year, Global Industry Group Predicts

Travelers are getting ready to pack their swimsuits or hiking shoes this summer as airlines gear up for the Covid-19 travel recovery to begin in earnest.

Speaking during a briefing on Tuesday, IATA Director General Alexandre de Juniac said the organization expects the recovery to "start by mid-year 2021." Leisure travelers — whether they are going to the beach or visiting friends or relatives — will lead that recovery, while business travel is expected to lag by as much as 18 months.

"When we look at the rollout of the vaccination policy in many developed countries, I think it’s compatible with the reopening plan that would allow the summer season to be, at least, a decent season for air transport," he said.

De Juniac's comments come as airlines begin reporting booking improvements. On Tuesday, U.S. discounter Allegiant Air reported a "moderate increase" in travel demand since the middle of February. The airline is one of the few that plan to grow beyond its 2019 capacity this year, with the first quarter forecast to be up 2-4.5 percent compared to two years ago.

On the same day, Cowen & Co. analysts reiterated their view that summer travel will be "strong" in the U.S. They forecast as much as a 38 percent jump in daily Transportation Security Administration (TSA) screening numbers to between 1.1 million to 1.4 million a day by Memorial Day in May, the symbolic American start to summer.

U.S. airlines are not the only ones seeing improvements. British Airways saw flight bookings jump 60 percent week-over-week on the day UK Prime Minister Boris Johnson unveiled his reopening plan for the country in February.

"People want to travel. And whenever possible, whenever travel restrictions are lifted and travel is safe, they book," Lufthansa Group CEO Carsten Spohr said during the company's fourth-quarter earnings presentation last week. While Lufthansa had yet to see a dramatic uptick in demand, he said he expected something once the German government eased travel restrictions.

But the improving outlooks do not hide the fact that the industry continues to face a challenging recovery. IATA's latest forecast has global passenger traffic recovering to, at best, 38 percent of 2019 levels this year owing to a weaker than expected first half of 2021. Airlines are expected to burn between $75 billion and $95 billion in cash with few — if any — likely to turn a profit this year.

And the U.S. Centers for Disease Control and Prevention, in releasing new guidance for fully vaccinated Americans on Monday, did not alter their standing recommendation against travel.

De Juniac acknowledged the first-half weakness on Tuesday. He noted that Easter — typically a busy travel period in many Western countries — was "too soon" for the travel recovery.

In addition, the recovery in highly-lucrative business travel will likely occur between 12 and 18 months after leisure flyers come back. That could also mean a summer — summer 2022 that is — recovery for corporate travel.

IATA is betting that digital health passports, like its Travel Pass, will play a big part in restarting business travel. Singapore Airlines will run the first full trial of the program on flights between London and Singapore from March 15-28, said Nick Careen, IATA senior vice president for airport, passenger, cargo and security, on Tuesday. The airline aims to fully integrate the platform into its app by mid-year.

But signing airlines onto Travel Pass, or any of the multitude of other digital health passports in the market, is only a beginning. Careen emphasized that governments need to adopt a platform and standards before any of them can become widely used. Only a smattering of small countries, including Aruba and Panama, have as yet signed onto one of the new apps.