During October, industry-wide revenue passenger-kilometres (RPKs) fell by 70.6% year-on-year posting a modest improvement from the 72.2% decline in September. Similar to last month, these gains were driven by domestic markets which were down 40.8% year-on-year vs. -43.3% YOY in September. However, international markets did not improve in October. International RPKs remained stagnant at -87.8%, confirming no clear recovery. While the market in Europe deteriorated for the second consecutive month, in Latin America the recovery accelerated and showed a robust improvement. Traffic in the Asia Pacific region remained muted, with domestic outcomes ranging from pre-crisis demand in China to no clear rebound in Australia. Throughout the month, Global load factors remained stable at 60.2% (Domestic LF at 70.4%, International LF at 42.9%), underlining that the financial situation for airlines is still very challenging.
Once again, domestic air travel provided airlines with a more reliable market during the month. This is partially due to pent-up demand from customers who had been prevented from traveling earlier this year due to lockdowns and other restrictions. While domestic markets drove the overall recovery, many regions showed significant divergences, which are largely attributed to the intensity of new COVID-19 outbreaks.
In terms of most recovered markets, the domestic China market leads again in October with domestic RPKs close to pre-pandemic levels for the second consecutive month. Other regions showed robust improvement as well, such as Japan with -45.3% YOY vs. -58.7% YOY in Sept., and Brazil with (-44.5% YOY vs. -55.3% YOY last month. Russia remained more resilient than most markets (-10% YOY vs. +2.7% in Sept.). However, in the US domestic traffic is still very weak due to a third wave of COVID-19 cases (60.7% YOY vs. -64.2% YOY in Sept.). In Australia, domestic traffic was battered further due to the country’s strict government regulations and policies, posting RPKs of -86.3% YOY vs. -88.1% YOY in Sept.
In October, the aggregated international RPKs contracted 87.8% vs. 88.8% YOY with performance varying by region. In Latin America, airlines posted a strong rebound of -86% YOY vs. -92.3% YOY during the month. In particular, the Nth-Central America market delivered outstanding performance with traffic down 65.3% YOY. Faced with renewed COVID-19 outbreaks and stricter government controls, international traffic worsened in Europe with RPKs decreasing from -83% YOY vs. -81.2% YOY in September. This represents Europe’s weakest performance since July. With travel restrictions remaining in place during October, international traffic in the Asia Pacific region also remained muted at -95.6% YOY. Airlines based in North America posted modest RPKs of -88.2% YOY vs. -91% YOY in September indicating a slower pace of improvement.
While international travel remains at the mercy of national policies and the success of efforts to control coronavirus, relaxing the UK quarantine requirement has proven to boost bookings. According to the new rules, the self-isolation period for people entering the UK is now reduced from 14 days to five. After the UK policy change on November 23rd, bookings on the UK - US market doubled. Many travel companies had been campaigning against the mandatory 14-day quarantine for all returning travelers since it was introduced in June. As demonstrated, a shorter quarantine will boost travel confidence and bookings and enable quicker recovery in such a hard-hit sector.
With positive announcements on COVID-19 vaccines being made and distributed around the world, the industry remains cautiously optimistic that the traffic recovery will remain gradual and return in the second half of 2021.
Source: IATA Air Passenger Monthly Analysis – October 2020
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