Dwindling passenger confidence to dent airline industry's recovery

A looming recession and concerns over safety is likely to hit passenger confidence and slow the airline industry’s recovery
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Demand for air travel is likely to return slowly once travel restrictions are lifted as passenger confidence remains low amid an oncoming recession and concerns over the safety of air travel.

That is the warning from the International Air Transport Association (IATA), which has called on governments to introduce confidence-boosting measures to help accelerate the airline industry’s recovery.

Airlines are expected to lose $314 billion in ticket sales this year because of Covid-19 with demand likely to hit rock bottom in Q2.

But a new survey commissioned by IATA shows that passengers are unlikely to leap back onto planes once the pandemic subsides.

The data shows that 40% of people would wait six months or longer to travel after the virus is contained, 47% would wait up to two months to travel and only 14% would travel immediately.

Nearly 70% said they could delay travelling until their personal financial situation stabilises.

The survey was carried out across 11 countries, including the UAE.

“Passenger confidence will suffer a double whammy even after the pandemic is contained—hit by personal economic concerns in the face of a looming recession on top of lingering concerns about the safety of travel. Governments and industry must be quick and coordinated with confidence-boosting measures,” said Alexandre de Juniac, IATA’s CEO.

IATA said that the trend for a cautious return-to-travel is being illustrated in the domestic markets of China and Australia, where new coronavirus infection rates have fallen to very low levels.

In China, while there was an early upswing from mid-February into the first week of March, the number of domestic flights plateaued at just over 40% of pre-Covid-19 levels.

Domestic demand in Australia continued to deteriorate even after the rate of new infections fell into single digits. There is still no sign of a recovery, according to IATA, with total domestic flights are at 10% of pre-Covid-19 levels, even as new infections nears zero.

De Juniac said that an immediate rebound from the “catastrophic fall in passenger demand appears unlikely”.

“People still want to travel. But they are telling us that they want clarity on the economic situation and will likely wait for at least a few months after any ‘all clear’ before returning to the skies,” he said.

De Juniac described the situation as an “emergency”, citing Virgin Australia, which entered into administration this week.

He warned that more airlines will run out of cash before the pandemic is over unless governments step in with financial aid.

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