Traffic among Arab air carriers is not now expected to return to pre-crisis levels until at least 2024 and could potentially not reach those levels before 2027, fresh analysis from the Arab Air Carriers Organisation (AACO) shows.
In its third status report of the impact of the pandemic on the economy, travel and tourism, published on 31 August, the Arabian airline body estimates the best-case scenario for passenger traffic among Arab carriers returning to 2019 levels is in 2024.
But it considers a worst-case scenario that traffic for these airlines will not return to the previous highs until 2027.
The fresh analysis comes as it now expects the global return in traffic to pre-crisis levels to take a year longer, in 2024, than its previous expectations.
After a bright start to the year, Arab carrier traffic was all but wiped out by the pandemic during April. Passenger traffic among these carriers in the first half was down 55% - on capacity cut 51% - compared to the same period in 2019.
”As for the second half of 2020, demand is expected to improve gradually as restrictions are relaxed and passengers regain confidence to travel,” AACO says. It expects traffic to be 57% down among airlines in the region for the full year, though it sees capacity cut only a third compared to 2019.
AACO also now sees a deeper impact for tourism to the Arab region. It had expected international tourist arrivals to be down 55% this year in a best-case scenario. It now projects a 65% drop in international visitors to the region in 2020 compared to last year.
Echoing its traffic outlook for the region, it expect international tourist arrivals to remain below 2019 levels until 2024 at best.
“If the pandemic intensifies and other related industries continue to suffer from its repercussions, the recovery path is expected to follow the worst-case scenario, where international tourist arrivals to the Arab world are forecast to remain below 2019 levels until 2027,” it says.
The analysis also highlights the impact on the Arab economy, particularly from lower oil prices. AACO’s previous best-case forecast was for the Arabian economy to recover to 2019 levels next year.
”However, the impact of the dual-shock (the pandemic and the drop in oil prices), caused more damage than expected, leading to contraction in trade and a collapse in oil revenues, travel and tourism, and remittances,” it notes
As a result it now see a return to last year’s levels in 2022 at the earliest - assuming average oil prices stay at around $45-50. If the oil price stays lower the economy may not reach 2019 levels until 2023.
”The outlook in the region remains highly related to the changes in the global oil markets,” AACO adds, noting oil revenues represented on average around 65% of the Arab world nominal GDP in 2019.