Forward airline bookings have weakened going into the first quarter of 2021, as IATA warns that the situation is likely to get worse before it gets better.
Speaking during a briefing today, the organisation’s chief economist Brian Pearce notes that while the industry saw “some modest improvement in bookings in the weeks following the vaccine announcement news” in the fourth quarter of 2020, that trend was reversed towards the end of December and into the first few days of 2021.
“We’ve actually seen quite a sharp drop-off in bookings, which means that the immediate outlook looks pretty challenging,” he explains, citing the impact of spiking virus cases and the imposition of further travel restrictions by governments around the world.
Today, bookings for the first quarter of 2021 are down 75%, 82% and 81% year-on-year respectively for January, February and March. At the same point of the fourth quarter of 2020 – which Pearce notes was “already weak” – IATA figures show forward bookings were down 71%, 81% and 80% year-on-year respectively for October, November and December.
The tough booking outlook comes as the industry continues to experience a reversal of the traffic recovery trend that peaked in the northern hemisphere summer season last year.
In early January 2021, the majority of international travel markets are showing “very little change” from the April 2020 lows, Pearce says.
He also observes that while the performance of global financial markets suggests “the pandemic is over”, IATA disagrees.
“We can see light at the end of the tunnel,” he says, but “it’s still some way away, and the situation is likely to get worse first”.
The association expects the industry to turn cash positive in 2021, but not until the fourth quarter, with the rollout of vaccines gradually giving governments the confidence to reopen markets as the year progresses.