Middle East airline business in historic Covid-induced slump

Middle Eastern airlines experienced a 92.3 per cent fall in demand for August, compared with a 93.3 per cent decline in July. Capacity collapsed 81.9 per cent, and load factor sank 47.1 percentage points to 35.3 per cent, according to data from the International Air Transport Association (IATA).

Globally, August passenger demand plummeted 88.3 per cent compared to August 2019, mildly improved over the 91.8 per cent decline recorded in July. Capacity sagged 79.5 per cent, and load factor fell 37.0 percentage points to 48.7 per cent. August’s revenue passenger kilometres (RPKs) was down 75.3 per cent compared to August 2019. This was only slightly improved compared to the 79.5 per cent annual contraction in July.

The dismal performance has prompted IATA to downgrade its traffic forecast for 2020 to reflect the weaker-than-expected recovery and now expects full-year 2020 traffic to be down 66 per cent compared to 2019. The previous estimate was for a 63 per cent decline.

Based on flight data, the recovery in air passenger services was brought to a halt in mid-August by a return of government restrictions in the face of new Covid-19 outbreaks in a number of key markets, IATA says. Forward bookings for air travel in the fourth quarter show that the recovery since the April low point will continue to falter. Whereas the decline in year-on-year growth of global RPKs was expected to have moderated to -55 per cent by December, a much slower improvement is now expected with the month of December forecast to be down 68 per cent on a year ago.

“August’s disastrous traffic performance puts a cap on the industry’s worst-ever summer season,” lamented Alexandre de Juniac, IATA’s Director General and CEO.

“International demand recovery is virtually non-existent and domestic markets in Australia and Japan actually regressed in the face of new outbreaks and travel restrictions. A few months ago, we thought that a full-year fall in demand of -63% compared to 2019 was as bad as it could get. With the dismal peak summer travel period behind us, we have revised our expectations downward to -66%,” he added.

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Dubai-based Emirates Airline, which had announced it would reinstate employees to full pay from the start of October, has now invited to take unpaid leave of up to six months, reflecting a slower than expected pick up in passenger numbers. The airline expects to grow its global network to 94 cities in October.

Abu Dhabi’s Etihad Airways meanwhile has extended the period of reduced pay for its staff until the end of the year.