‘Air traffic won’t recover for 3 yrs’

The aviation industry’s recovery from the coronavirus outbreak will be long and slow, with passenger numbers likely to stay below pre-pandemic levels through 2023, according to S&P Global Ratings, which warned of more rating downgrades for airports over the next few months.

Global air passenger numbers will fall as much as 55% this year, a far steeper slump than previously estimated, analysts including Tania Tsoneva and Julyana Yokota wrote in a report dated

May 28. Any recovery will depend on factors including how governments ease travel restrictions, people’s willingness to fly again and the extent of economic damage from the outbreak, they said.

Some countries are gradually allowing flights to operate following lockdowns and restrictions on movement, but volumes remain low. Airports are struggling for business as demand for services like dining and duty-free shopping essentially evaporated.

“Air travel will eventually return when current health and safety concerns have been meaningfully addressed by the industry and consumer confidence rebounds, supported by steady historical growth rates in air traffic of 4%-5% per year,” the analysts said. “A more widespread adoption of remote working and virtual meetings could have a lingering impact on business travel, which has been the more lucrative passenger segment for the airlines.”

S&P has already lowered its ratings on 11 airports since March and expects their financial strength to be eroded by the shutdowns, and an anaemic recovery, capacity restructuring, greater counterparty risks of airlines.