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As the airline industry continues to struggle in 2021, IATA’s latest report on air travel data from the month of February shows that passenger traffic fell both compared to pre-COVID levels (February 2019) and compared to the immediate month prior (January 2020).

It further notes the following:

  • Total demand for air travel in February 2021 (measured in revenue passenger kilometers or RPKs) was down 74.7% compared to February 2019. That was worse than the 72.2% decline recorded in January 2021 versus two years ago.
  • International passenger demand in February was 88.7% below February 2019, a further drop from the 85.7% year-to-year decline recorded in January and the worst growth outcome since July 2020. Performance in all regions worsened compared to January 2021.
  • Total domestic demand was down 51.0% versus pre-crisis (February 2019) levels. In January it was down 47.8% on the 2019 period. This largely was owing to weakness in China travel, driven by government requests that citizens stay at home during the Lunar New Year travel period.

“February showed no indication of a recovery in demand for international air travel. In fact, most indicators went in the wrong direction as travel restrictions tightened in the face of continuing concerns over new coronavirus variants. An important exception was the Australian domestic market. A relaxation of restrictions on domestic flying resulted in significantly more travel. This tells us that people have not lost their desire travel. They will fly, provided they can do so without facing quarantine measures,” said Willie Walsh, IATA’s Director General.

Africa

Traffic dropped 68.0% in February versus February two years ago, which was a setback compared to a 66.1% decline recorded in January compared to January 2019. February capacity contracted 54.6% versus February 2019, and load factor fell 20.5 percentage points to 49.1%.

Two key components for an efficient restart of travel need to be urgently progressed. The first is the development of global standards for digital COVID-19 test and/or vaccination certificates. The second is government agreement to accept certificates digitally. Our experiences to date already demonstrate that paper-based systems are not a sustainable option. They are vulnerable to fraud. And, even with the limited amount of flying today, the check-in process needs pre-COVID-19 staffing levels just to handle the paperwork. Paper processes will not be sustainable when travel ramps up. The IATA Travel Pass app was developed precisely in anticipation of this need to manage health credentials digitally. Its first full implementation trial is focused on Singapore, where the government has already announced that it will accept health certificates through the app. This will be an essential consideration for all governments when they are ready to relink their economies with the world through air travel,” said Walsh.

Photo: Getty Images

Boeing projects global and diversified funding will continue to flow into the aircraft financing sector as the aviation sector navigates the global pandemic and vaccine deployment continues to accelerate.

Financiers and investors understand the industry’s resilience and the long-term fundamentals that make aircraft a valuable asset class,” said Tim Myers, president of Boeing Capital Corporation. “Despite the unprecedented impacts of COVID-19 on the global aerospace industry, there generally continues to be liquidity in the market for our customers, and we expect it to further improve as travel begins to rebound.”

The 2021 Current Aircraft Finance Market Outlook (CAFMO), the first published since 2019, reflects Boeing’s near-term view of market dynamics and assesses financing sources for new commercial airplane deliveries. Due to the ongoing impacts of the pandemic, the 2021 CAFMO excludes its customary one- and five-year industry financing projections.

Industry fundamentals continue to show varying degrees of strength in different markets depending on the regional trends of the global pandemic,” Myers said. “We expect that capital will continue to be routed into the sector by established players and as new entrants seek opportunities during the industry’s recovery.”

The 2021 CAFMO reports the aircraft financing environment ended 2020 with enough liquidity to finance deliveries, but with stresses particularly in the bank debt and tax equity markets. The 2021 CAFMO, an introductory video and regional financing data is available at www.boeing.com/CAFMO. Select highlights include the following:

– At the industry level, commercial aircraft delivery funding volume totaled $59 billion, a 40% decrease from 2019 levels.

– The top sources of Boeing delivery financing were cash, bank debt and capital markets, and 100% of Boeing deliveries were financed by third parties.

– Aircraft lessors executed a significant volume of sale-leaseback transactions, and the industry-wide leased fleet climbed to 46%.

– Capital markets for aviation volumes were 70% higher than 2019.

– Commercial banks shored up the aviation industry’s need for liquidity early in the pandemic, but long-term bank debt became one of the less utilized forms of financing.

– Institutional investors and funds continued to seek aviation exposure, stepping up as some financiers paused and sector credit spreads widened.

– Export credit agencies remain a small but important funding source during the pandemic.

– Credit-enhanced financing saw further progress as a complementary funding source, totaling to 4% of the financing mix for Boeing deliveries.

According to the Boeing 2020 Commercial Market Outlook, the global commercial fleet is expected to reach 48,400 by 2039, up from 25,900 airplanes today.

-Boeing-