Air Passenger Forecasts: 2020 Falls, Expected Recovery and - PowerPoint PPT Presentation

Air Passenger Forecasts: 2020 Falls, Expected Recovery and Long-RunOpportunities David Goodger Andrew Matters Managing Director, EMEA Deputy Chief Economist Tourism Economics IATA dgoodger@oxfordeconomics.com mattersa@iata.org April 2020

Global lockdowns are having a very large impact on economy and travel Global lockdowns China Italy Spain 16% France Germany Past US (specific states) UK India Australia Japan Other 63% Present 0 20 40 60 80 100 % of global GDP Source : Oxford Economics/Haver Analytics Source: IATAEconomics usingFlightRadar24 data Questions: Use the question panel on the right

Immediate economic impact will be greater than during GFC World: GDP Forecast % quarter Non-China EM q/q contribution (RHS) 4 China q/q contribution (RHS) Advanced economies q/q contribution (RHS) Global % quarter (LHS) 2 0 -2 -4 -6 -8 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source : Oxford Economics/Haver Analytics Questions: Use the question panel on the right

Policy stimulus is providing vital support for recovery Global: Fiscal impulse Ppts of potential GDP 2.5 Advanced Economies Emerging Markets World 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 Forecast -1.5 -2.0 2000 2005 2010 2015 2020 Source : Oxford Economics/Haver Analytics Questions: Use the question panel on the right

Expected growth in recovery but impacts will be felt into the medium term Global GDP Outlook Annual growth, % Global US Eurozone China 10% 8% 6% 4% 2022 GDP relative to pre-recession trend 2% 0% -2% -4% -6% 2019 2020 2021 2022 Source: Oxford Economics Questions: Use the question panel on the right

Travel will fall more sharply than the wider economy Global Air PassengerGrowth Global Air Passengers Relative to 2019 Levels Annual growth, % Annual growth,% Total International Domestic 60% 60% 40% 40% 20% 20% 0% 0% -20% -20% -40% -40% -60% -60% 2020 2021 2022 2023 2020 2021 2022 2 Source: IATA, TourismEconomics Source: IATA, Tourism Economics Questions: Use the question panel on the right

The dramatic fall in the number of flights has occurred across all regions Source: IATAusingFlightRadar24 data Questions: Use the question panel on the right

The typical airline had 2mths of cash available at the start of the year Source: IATA, The AirlineAnalyst Questions: Use the question panel on the right

Outside the top-30 airlines, debt levels remain high Source: IATA Questions: Use the question panel on the right

The usual v-shape recovery didn’t involve a global recession Impact of past disease outbreaks on aviation SARS(2003) AvianFlu (2013) AvianFlu (2005) 120 NorthAmerican AsiaPacific Airlines RPKs RPKsto,from and within 110 Airlines RPKs South-EastAsia Index (crisis month=100) 100 90 MERS Flu(2015) 80 RPKsto,from and within South SARS(2003) Korea 70 AsiaPacific 60 Airlines RPKs 50 40 SARS(2003) 30 China DomesticMarket RPKs 20 10 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 Months before and after the start of the crisis Source: IATA Questions: Use the question panel on the right

Restoring passenger confidence will be crucial Returning to Travel After ContainmentAnnouncement 50% 47% 45% 45% 40% 35% 28% 30% 23% 25% 22% 20% 14% 15% 8% 10% 7% 4% 3% 5% 0% Not travel for the Not wait at all Wait a month or two Wait six months or so Wait a year or so foreseeable future February Survey AprilSurvey Source:IATA Questions: Use the question panel on the right

Downside risk from larger and longer lockdown disruption Global: comparing the forecast and GFC Index (quarter prior to recession, t=100) Great Financial Crisis (GFC) 120 Pre-GFC baseline (Jan 2008) Current baseline 115 Pre-coronavirus baseline (Jan 2020) Downside scenario 110 105 100 95 90 85 t-4 t t+4 t+8 t+12 t+16 Source : Oxford Economics/Haver Analytics Questions: Use the question panel on the right

Expected impacts in 2020 will be affected by duration and seasonality Global arrivals: average monthly seasonality • Extent of restrictions into H2 will %shareannual arrivals,2013-18 influence 2020 performance, aswell as 16% sentiment and economic drivers. 14% 12% • Current travel restrictions are expected to remain foraround 4 months. 10% 8% • Some easing of restrictions for domestic 6% and short-haul travel is expected to Europe MEA 4% begin for peak summermonths. APAC N America 2% Latin America 0% • Second wave of outbreakand Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep lockdowns are a key risk. Source: UNWTO, Tourism Economics Shading is expected duration of travel restrictions:dark shading is current restrictions,lighter is some easing Questions: Use the question panel on the right

Downside scenario from economic drivers and reduced propensity to travel Cumulative loss over 5 years: 1.6bn passenger journeys Pre-crisis level recovered a full year later (2023 vs 2022). Global Air Passenger Downside Scenario Global Air Passenger Scenarios Relative to 2019Levels Annual growth, % Annual growth, % Baseline Downside Baseline Downside 40% 40% 20% 20% 0% 0% -20% -20% -40% -40% -60% -60% 2020 2021 2022 2023 2020 2021 2022 2023 Source: IATA, Tourism Economics Source: IATA, TourismEconomics Questions: Use the question panel on the right

Regional profiles are similar with AsPac & AME recovering quickest… Source: IATA/TourismEconomics Questions: Use the question panel on the right

The long-run outlook remains robust… Source: IATA/TourismEconomics Questions: Use the question panel on the right

…with Asia Pacific continuing to lead the way Europe 636m NorthAmerica 2.2% 522m MiddleEast 2.2% Asia Pacific 274m 2,725m 4.4% 5.0% Africa LatinAmerica 209m 365m 4.4% 3.4% Source: IATA/TourismEconomics Questions: Use the question panel on the right

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