INTERNATIONAL. Bain & Company’s latest predictions for the rate of airline recovery through to the middle of 2022 suggest a slower return to 2019 numbers compared to its previous report in January. The analyst attributes the latest easing of its numbers to tightening restrictions in some countries, an uneven pace of vaccination and slow development of standardised health travel documentation.
There was a more optimistic note, however, in Bain’s commentary on the latest recovery predictions. Looking further ahead, it said that the encouraging results of vaccination have created more certainty where, a month ago, there was considerably less data available. As a result, after the fourth quarter of 2022, the four demand recovery scenarios have all now marginally improved compared with the previous projections.
Looking at what can be expected in terms of recovery this year, Bain’s latest projection for passenger volumes (based on revenue passenger kilometres) under its most optimistic of the scenarios has fallen by more than -4% to 73.48% since the January predictions, measured against 2019 levels.
This particular scenario, known as ‘accelerated vaccine’, refers to conditions involving the development and distribution of a reliable COVID-19 vaccine (or equivalent treatment) on a faster timeline than previous and current vaccines. Bain’s model currently assumes wide availability starting April 2021, with global distribution occurring in phases over the course of a year.
Meanwhile, under its worst case scenario, which Bain & Company calls ‘drifting’, the comparison to 2019 by the end of December falls to a predicted 51.57%. The drifting classification refers to a pessimistic scenario that would include rolling COVID-19 outbreaks through 2021, a lack of coordinated response between governments, a global economic recession and prolonged travel restrictions.
Bain also plots two other scenarios in its analysis. Namely, a ‘coordinated recovery’ (which refers to systematic coordination of the pandemic response across countries, including common standards and regulations) and ‘baseline’, which projects the most likely scenario based on current conditions. Under the first of these scenarios, traffic could recover to 68.33% of 2019 levels by the year end, and 62.63% under the latter, according to the analyst.
With these falling percentages, projected airlines revenues have also decreased significantly, according to Bain’s analysis. Since the previous forecast, projected revenue for this year in the baseline scenario fell US$21 billion to US$316 billion, 47% of the industry’s total revenue in 2019. That follows a US$23 billion decrease in 2021 baseline revenue in the previous projection.
Looking ahead to July 2022, Bain’s projections for airline passenger volume in the G20 countries remained essentially flat. Mexico saw the largest gain since the last forecast, while Australia had the biggest decline.
For more detailed month-by-month and longer term predictions on airline recovery from Bain & Company, click here.
*At the inaugural APAC Dialogue webinar last week, Bain & Company Partner Mauro Anastasi and Jack MacGowan of Castlepole Consulting discussed some key findings from a new Trinity White Paper – ‘Travel Retail Wayfinding for the Post-Covid Era’, which they are preparing in association with The Moodie Davitt Report. The full report will appear soon. Click here for a story on their presentation and reaction from leading industry stakeholders from the webinar.
