ICAO Forecasts 1.5 Billion Fewer International Passengers In 2020

The International Civil Aviation Organization (ICAO) has been monitoring the impact of the COVID-19 since February. On 30th…

ICAO Forecasts 1.5 Billion Fewer International Passengers In 2020

The International Civil Aviation Organization (ICAO) has been monitoring the impact of the COVID-19 since February. On 30th April, it issued a prediction for how the industry would be hit by the end of the year. The ICAO predicts that international air travel demand could drop by 1.5bn passengers at the end of the year in the worst case. It’s also made forecasts for airport traffic, revenues, and seat capacity.

Europe will be the worst-hit area as ICAO predicts 1.5bn fewer passengers in 2020. Photo: Getty Images

ICAO predictions could aid recovery plans

Earlier this week, the ICAO shared a forecast on its latest findings of how the coronavirus pandemic is expected to hit the industry. Among its figures were details about a steep decline in passenger numbers by the end of the year.

The ICAO has been monitoring the COVID-19 situation since February 2020 when the virus became more widespread. It hopes that countries and airlines will use its latest findings to define they recover after the coronavirus.

A comment in its latest press release said:

“The projections are significant to many countries now planning their COVID-19 recovery scenarios, given the importance of tourism, global supply chains, and many other air connectivity factors to local socio-economic prosperity.”

International passenger numbers to rapidly decline

Perhaps the most shocking and impactful of the ICAOs predictions is the fall in passenger numbers. It says that by the end of the year, international air travel could see as much as 1.5bn fewer travelers.

Empty departures at Narita Airport, Japan
A best-case scenario could still see fewer than 805 million international travelers. Photo: Getty Images

Before the COVID-19 outbreak, 2020 was looking like a prosperous year. The industry had estimated it would cater to an additional 67 million passengers by the end of the year. However, things have since changed.

In the best-case scenario – one that sees a quick recovery of the international air travel – the ICAO estimates that passenger air traffic for the year-end will be well below 2019 levels. 2020 could lose between 805m to 1.2bn passengers compared to last year’s figures. That represents a reduction of between 872m and 1.3bn passengers on what had been forecast for the year.

However, the ICAO forecasts that if the coronavirus continues for a prolonged period and the industry does not recover quickly enough, then passenger numbers could fall between 1.1bn and 1.5bn on those pre-outbreak expectations.

International seat capacity could decrease by 72%

The ICAO reported that on 6th April 2020, 96% of all the world’s destinations had implemented some form of travel restriction. The organization now predicts that international seat capacity will fall by the end of the year, where it should have risen.

Empty delta plane coronavirus
Seat capacity should have risen this year but it’s already falling. Photo: Getty Images

Initially, seat capacity worldwide was expected to increase by some 3.4%. Now, in a best-case scenario with quick recovery, that figure could fall by up to 56% by the end of the year. With a prolonged coronavirus impact and slow recovery, the ICAO predicts this number could be up to 72%.

The ICAO forecasts that Europe will be one of the worst areas hit. As we come into the summer peak season, Europe will lose many of the holidaymakers that routinely flock to the continent on annual summer vacations.

By the end of the year, Europe will lose between 40-74% of its seat capacity. European airports could also lose around 35% of their passengers and approximately 42% of their revenue.

The drop in travel demand will also hit the Asia/Pacific region hard.

Barcelona Airport departures
Popular destinations like Barcelona will miss out on holiday travelers this year. Photo: Avinash Bhat via Flickr

Bleak revenue forecast for the months ahead

All of these losses accumulate to a substantial financial loss for the industry. In its report, the ICAO believes that international air travel could miss out on upwards of US$150bn.

With a short recovery, international gross passenger operating revenues could fall between $153bn to $231bn. In the worst-case scenario with a slow recovery, this drop could be between $198bn and $273bn.

By contrast, gross passenger operating revenues were due to increase by $12bn in comparison to 2019 levels.

These latest figures shed light on just how problematic coronavirus has become for the industry. Most would have expected demand, seating capacity, and revenue to drop. But, did anyone expect it to be by this much?

Are these figures inline with your own predictions? Let us know your thoughts in the comments. 

Source : Simple Flying More   

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Singapore Airlines Considers Selling Aircraft

Singapore Airlines is examining its option to sell and leaseback some aircraft in a bid to raise some…

Singapore Airlines Considers Selling Aircraft

Singapore Airlines is examining its option to sell and leaseback some aircraft in a bid to raise some cash. A recent report in Forbes indicates that the airline is seeking some flexibility with its fleet. With most of its aircraft owned outright, this move would give Singapore Airlines much needed cash without adding too much to overall long-term costs.

Singapore Airlines is examining the prospect of selling and leasing back some aircraft. Photo: Getty Images

A potential source of much-needed cash

Singapore Airlines has a fleet of over 130 aircraft. Another 70+ aircraft operate for its subsidiaries, SilkAir and Scoot. Of this fleet, the Singapore Airlines Group owns most aircraft outright. Older leased aircraft are starting to make their way out in favor of newer aircraft.

The Boeing 787-10 and Airbus A350-900, and future Boeing 777X, will help replace planes like the Airbus A330 and older Boeing 777s. These newer, next-generation planes are more fuel-efficient and give Singapore Airlines a lot more flexibility.

Singapore 787-10
Singapore Airlines received the world’s first Boeing 787-10. Photo: Boeing

Since most aircraft are owned outright by Singapore Airlines, it makes sense for the carrier to consider selling its aircraft and leasing them from their new owners. The Asian carrier could partner with a leasing company for a deal on a few planes. This would give Singapore Airlines some much-needed cash to tide itself over, although it would raise the airline’s expenses in the long-term.

The Singapore Airlines Fleet

In terms of Boeing jets, the airline has 777-200s, -300s, 787-10s, and 747-400Fs (for cargo operations). For Airbus jets, the carrier has A380s, A330s, and A350-900s.

SQ 777
Singapore Airlines had over 30 Boeing 777-300s in its fleet at the end of 2019. Photo: Boeing

For a sale-and-leaseback agreement, the airline will need to weigh its long-term fleet plans. This would mean older aircraft like the 777s would not be prime candidates. Terminating a lease early is not as easy as retiring a plane early. This leaves the Airbus A350s and Boeing 787-10s.

The airline still has both types of aircraft on order and will continue to take these planes. The latest orders and deliveries count from Airbus shows that the manufacturer has delivered 48 of the 67 A350s on order. The latest numbers from Boeing show that the American manufacturer has delivered 15 of the 44 787-10s Singapore Airlines has ordered. Either type will likely stay in the fleet for a while to come (although we know Singapore Airlines does like to have a young fleet).

Singapore Airlines ordered a total of 67 Airbus A350s. Photo: Airbus

These younger and newer aircraft also require less maintenance and thus have lower operating costs. Plus, with large orders of both types, it shows that the airline is committed to this next-generation fleet and provides additional stability for lessors. If the fleet count was smaller, it would be easier for Singapore Airlines to remove those planes early, which could leave lessors searching for a new customer or else scrapping older planes.

A350ULR
Some of the A350s are the less common ultra-long-range versions, used for flights to New York and Los Angeles. Photo: Airbus

Sale-and-leaseback agreements

Fellow Star Alliance carrier, United Airlines, entered into a sale-and-leaseback agreement with Singapore-based BOC Aviation in mid-April. In March, Cathay Pacific also engaged in a sale-and-leaseback deal with BOC Aviation for six 777-300ERs.

BOC Aviation does work with Scoot, so it would not be surprising to see the Singapore Airlines Group expand on this relationship. However, it is unclear if the lessor is interested in more sale-and-leaseback agreements.

Do you think Singapore Airlines should sell and leaseback some aircraft? Let us know in the comments!

Source : Simple Flying More   

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