• Wed. Oct 5th, 2022

Positive outlook for the airline industry for 2022

Moody’s economic analysts predict that despite disruption caused by increased coronavirus cases and inclement weather during the 2021-2022 winter holiday season, the global outlook for passenger airlines remains positive for this year. .

The company said: “For the first quarter, government travel requirements – vaccinations, negative tests, quarantines, etc. – will remain the main obstacle to airline bookings.” However, the company added that it expects those restrictions to ease as daily infection rates, currently driven by the Omicron variant, decline.

He predicts that the rapid spread of the Omicron variant will peak in the coming weeks, given that previous peaks of infection around the world have typically lasted between 10 and 15 weeks.

As a result, Moody’s predicts that passenger volumes will “rebound strongly” through 2022 and into 2023, due to what the company sees as strong pent-up demand for commercial, leisure, long-distance flights. -mail and business.

The company predicts that the revenues of the 20 airlines they note, which accounted for around 35% of the global airline industry’s revenue in 2019, will grow to $ 275 billion in 2022, from 60% year-on-year, rising to $ 275 billion in 2022. of 165 billion dollars. in 2021.

Moody’s also says it expects business travel from large corporations to return this year. The company previously predicted that the recovery in business travel would begin in January 2022 – before the emergence of the Omicron variant – but now expects the recovery to begin in the second half of the first quarter.

Moody’s remains positive despite bad winter season for airlines

The analyst’s optimism comes despite the fact that flight tracking website FlightAware has reported more than 20,000 flight cancellations worldwide since December 24 due to Covid-related staff shortages and extreme weather conditions . According to Moody’s, that figure represents between 5% and 10% of daily airline schedules during what is typically one of the busiest travel times of the year.

Moody’s said: “Although high profile, flight cancellations are only a temporary problem for airlines, and the cancellation rate will decline in the coming weeks.”

The company also said it “expects the financial impact of cancellations to be modest, slightly reducing operating cash flow,” with the “incentive compensation to support flight crew staffing” being the “one. main point of pressure on costs “.

Demand has increased in previous periods of easing travel restrictions

The company highlighted reports from the US Transport Security Administration that the volume of travelers passing through airport checkpoints throughout the winter holiday season was around 85% of 2019 levels.

Moody’s also pointed out that air travel across Europe has risen to more than 65% of 2019 levels following the easing of Covid-related travel restrictions by European governments last summer. This compares to the 30% currently reported following the implementation of the Omicron-related measures later in 2021.

The company also said similar recoveries were recorded in Canada and Australia during periods of easing restrictions.