Global demand for air travel, air cargo improving
The recent re-openings of boarders for vaccinated travellers should give a boost to the large-scale restoration of the freedom to travel; the cost-competitiveness of air cargo relative to that of container shipping remains favourable
IATA's vision for safely re-establishing global connectivity is based on five key principles: Vaccines should be available to all as quickly as possible; vaccinated travellers should not face any barriers to travel; Testing should enable those without access to vaccines to travel without quarantine; Antigen tests are the key to cost-effective and convenient testing regimes, and Governments should pay for testing, so it does not become an economic barrier to travel
Total demand for air travel in September 2021 (measured in revenue passenger kilometers or RPKs) was down 53.4 per cent compared to September 2019. This marked an uptick from August, when demand was 56.0 per cent below August 2019 levels.
Domestic markets were down 24.3 per cent compared to September 2019, a significant improvement from August 2021, when traffic was down 32.6 per cent versus two years ago. All markets showed improvement with the exception of Japan and Russia, although the latter remained in solid growth territory compared to 2019.
International passenger demand in September was 69.2 per cent below September 2019, fractionally worse than the 68.7 per cent decline recorded in August.
"September's performance is a positive development but recovery in international traffic remains stalled amid continuing border closures and quarantine mandates. The recent US policy change to reopen travel from 33 markets for fully vaccinated foreigners from 8 November is a welcome. Along with recent re-openings in other key markets like Australia, Argentina, Thailand, and Singapore this should give a boost to the large-scale restoration of the freedom to travel," said Willie Walsh, IATA's Director General.
"Each re-opening announcement seems to come with similar but different rules. We cannot let the recovery get bogged down in complication. The ICAO High Level Conference on Covid-19 agreed that harmonization should be a priority. The G20 declared a commitment to take action to support a recovery with seamless travel, sustainability, and digitalization. Now governments must put actions behind these words to realize simple and effective measures. People, jobs, businesses and economies are counting on real progress," said Walsh.
As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of Covid-19, unless otherwise noted, all comparisons below are to September 2019 which followed a normal demand pattern. Global demand, measured in cargo tonne-kilometers (CTKs), was up 9.1 per cent compared to September 2019 (9.4 per cent for international operations).
Capacity remains constrained at 8.9 per cent below pre-Covid-19 levels (September 2019) (-12 per cent for international operations).
Several factors impacting global air cargo demand should be noted:
Supply chain disruptions and the resulting delivery delays have led to long supplier delivery times. This typically means manufacturers use air transport, which is quicker, to recover time lost during the production process. The September global Supplier Delivery Time Purchasing Managers Index (PMI) was at 36, values below 50 are favourable for air cargo.
The September new export orders component and manufacturing output component of the PMIs have deteriorated from levels in previous month but remain in favourable territory. Manufacturing activity continued to expand at a global level but, there was contraction in emerging economies.
The inventory-to-sales ratio remains low ahead of the peak year-end retail events such as Single's Day, Black Friday and Cyber Monday. This is positive for air cargo, however further capacity constraints put this at risk.
The cost-competitiveness of air cargo relative to that of container shipping remains favourable. Pre-crisis, the average price to move air cargo was 12.5 times more expensive than sea shipping. In September 2021 it was only three times more expensive.
"Air cargo demand grew 9.1 per cent in September compared to pre-Covid levels. There is a benefit from supply chain congestion as manufacturers turn to air transport for speed. But severe capacity constraints continue to limit the ability of air cargo to absorb extra demand. If not addressed, bottlenecks in the supply chain will slow the economic recovery from Covid-19. Governments must act to relieve pressure on global supply chains and improve their overall resilience," said Willie Walsh, IATA's Director General.
To relieve supply chain disruptions, including those highlighted by the US on supply chain resilience on the sidelines of last weekend's G20 Summit, IATA is calling on governments to: Ensure that air crew operations are not hindered by Covid-19 restrictions designed for air travellers.
Implement the commitments governments made at the ICAO High Level Conference on Covid-19 to restore international connectivity. This will ramp-up vital cargo capacity with "belly" space. The need of the hour is to provide innovative policy incentives to address labour shortages where they exist.