Hotel & Tourism SMARTreport #45

EUROPE
AIR TRANSPORT NEWS
A POSITIVE OUTLOOK
FOR AIR TRANSPORT IN 2020
The International Air Transport
Association IATA predicts strong
growth for the airline industry in
2020, although concerns about
the environment and tensions in
the Middle East could dampen the
demand…
If 2019 was a more challenging year for
airlines, 2020 should bring back a smile
to the industry, according to the latest
forecasts released by the International Air
Transport Association in December.
Airlines suffered a difficult year in 2019
as numerous factors impacted market
demand. The first factor was the revival of
trade wars between the United States and
various countries such as China. Another
factor was the suspension of all flights by
the Boeing 737MAX which translated into
capacity cut for many airlines. Uncertainty
over the Brexit dampened also demand.
"They all came together to create a tougher
than anticipated business environment for
airlines,” comments Alexandre de Juniac,
IATA's Director General and CEO.
2019 was also one of the worst years for
airline bankruptcies. Half a dozen carriers
disappeared, from India’s second largest
carrier Jet Airways to Slovenian national
carrier Adria Airways, from holiday giant
Thomas Cook to low cost carrier WOW
Air or from French Caribbean carrier XL
Airways to Britain regional airline Bmi.
According to de Juniac, it appears that
2019 will be the bottom of the current
economic cycle and the forecast for 2020
is turning brighter.
Forecasts are for the global airline industry
to produce a net profit of €26.2bn in
2020, improved over a net profit of
€23.2bn expected in 2019. The latter was
revised downward from a €25bn forecast
last June.
EUROPEAN AIRLINES FORECAST A GROWTH
IN PROFIT BUT WEAKENING DEMAND
European carriers are forecast to report
a €7.05bn net profit in 2020 (up from
€5.52bn for 2019) as airlines in the region
will benefit from stronger economic
growth and the consolidation of airlines
network. Expansion is expected to be
moderate, helping to improve the supplydemand
balance. The net profit per
passenger is expected to be €5.70.
The consolidation movement follows
a series of European airline failures,
which translated into capacity cuts.
Another factor is the “flight shaming”
effect launched in Scandinavia to fight
climate change. This translated already
into a decline in air travel in Sweden by
4% in 2019 and the movement could
further expand to other countries such
as Denmark, the Netherlands or Austria
in 2020. Passengers capacity is due to
grow by 3.7% in 2020, its smallest gain
since 2015; while passenger traffic in RPK
(revenue Passengers/km) would grow by
3.8%.
PASSAGER DEMAND AND CAPACITY GROWTH
BY REGION
GLOBAL PASSAGERS (billion, segment basis)
© IATA