IATA: Air Cargo Demand Slumps in February as COVID-19 Takes Hold; Passenger Demand Plunges on COVID-19 Travel Restrictions

- Geneva, Switzerland.

The International Air Transport Association (IATA) released February 2020 data for global air freight markets showing that demand, measured in cargo tonne kilometers (CTKs*), decreased by 1.4% compared to the same period in 2019. Adjusting the comparison for the impact of the Lunar New Year, which fell in February in 2019, and the leap year in 2020, which meant an additional day of activity, seasonally-adjusted demand was down 9.1% month-on-month in February. 

By February, the negative impacts of the COVID-19 crisis on air cargo demand were becoming visible. The month witnessed several significant developments:
 

  • Manufacturing production in China, one of the world’s largest air cargo markets, dropped sharply due to widespread factory closures and travel restrictions.
  • Global export orders fell to a historically low level. The global Purchasing Managers Index (PMI) is in contraction territory, with all major trading nations reporting falling orders. 
  • Significant cargo capacity was lost as a result of airlines reducing passenger operations in response to government travel restrictions due to COVID-19, severely impacting global supply chains.


Cargo capacity, measured in available cargo tonne kilometers (ACTKs), dropped by 4.4% year-on-year in February 2020. This is subject to the same distortions as the non-seasonally adjusted demand numbers. 

“The spread of COVID-19 intensified over the month of February, and with it, the impact on air cargo. Adjusted demand for air cargo fell by 9.1%. Asia-Pacific carriers were the most affected with a seasonally-adjusted drop of 15.5%. What has unfolded since is a story of two halves. The disruption of global supply chains led to a fall in demand. But the dramatic disruption in passenger traffic resulted in even deeper cuts to cargo capacity. And the industry is struggling to serve remaining demand with the limited capacity available. We only got a first glimpse of this in February. Among all the uncertainty in this crisis, one thing is clear—air cargo is vital. It is delivering lifesaving drugs and medical equipment. And it is supporting global supply chains. That’s why it is critical for governments to remove any blockers as the industry does all it can to keep the global air cargo network functioning in the crisis and ready for the recovery,” said Alexandre de Juniac, IATA’s Director General and CEO.

February 2020 (% year-on-year)

World share1

CTK

ACTK

CLF (%-pt)2

CLF (level)3

Total Market

100.0%

-1.4%

-4.4%

1.5%

46.4%

Africa

1.8%

6.2%

3.0%

1.1%

36.8%

Asia Pacific

34.6%

-2.2%

-17.7%

8.6%

54.3%

Europe

23.6%

-4.1%

-3.8%

-0.2%

53.1%

Latin America

2.8%

1.8%

-2.6%

1.5%

34.2%

Middle East

13.0%

4.3%

6.0%

-0.7%

46.1%

North America

24.3%

-1.8%

4.1%

-2.2%

37.2%

1 % of industry CTKs in 2019  2 Year-on-year change in load factor  3 Load factor level

Regional Performance

Airlines in Europe suffered a sizeable decline in year-on-year growth in total air cargo volumes in February 2020, while North American and Asia-Pacific carriers experienced more moderate falls. Middle East, Latin America and Africa were the only regions to record growth in air freight demand compared to February 2019.  

  • Asia-Pacific airlines saw demand for air cargo contract by 2.2% in February 2020, compared to the year-earlier period. Seasonally-adjusted cargo demand fell by 15.5% compared to January 2020, to levels last seen in early 2014. The drop in demand was largely due to the impact of COVID-19. Capacity decreased 17.7% - the largest fall since early 2013. Cargo capacity in China dropped sharply in February, driven in large part by the collapse of belly-hold capacity. 
  • North American airlines saw demand decrease by 1.8% in February 2020, compared to the same period a year earlier. Capacity increased by 4.1%. Cargo traffic on the Asia-North America trade lanes decreased by 2.4% year-on-year as a result of factory closures in Asia due to COVID-19. 
  • European airlines posted a 4.1% decrease in cargo demand in February 2020 compared to the same period a year earlier. European carriers were among the first to cancel flights to and from Asia, contributing to the drop in demand in February. The Within Europe market decreased by 7.8% year-on-year. This suggests that the region was affected by global supply chain disruptions and early COVID-19 containment measures – notably in Northern Italy, an important manufacturing region. Capacity decreased by 3.8% year-on-year.
  • Middle Eastern airlines’ cargo demand increased 4.3% in February 2020 compared to the year-ago period. Capacity increased by 6.0%. However, given the Middle East’s position connecting trade between China and the rest of the world, the region’s carriers have significant exposure to the impact of COVID-19 in the period ahead. 
  • Latin American airlines experienced an increase in freight demand in February 2020 of 1.8%. Capacity decreased by 2.6% year-on-year. The region was relatively unaffected by the COVID‑19 outbreak in February. However, disrupted global supply chains and a fragile economic backdrop in some countries in the region continue to create headwinds for air cargo.
  • African carriers posted the fastest growth of any region for the 12th consecutive month in February 2020, with an increase in demand of 6.2% compared to the same period a year earlier. Capacity grew 3.0% year-on-year. The Africa-Asia and Africa-Middle East trade lanes continue to bring robust growth to the region. 

View February Freight Results (pdf)

PASSENGER

The International Air Transport Association (IATA) announced global passenger traffic data for February 2020 showing that demand (measured in total revenue passenger kilometers or RPKs) fell 14.1% compared to February 2019. This was the steepest decline in traffic since 9.11 and reflected collapsing domestic travel in China and sharply falling international demand to/from and within the Asia-Pacific region, owing to the spreading COVID-19 virus and government-imposed travel restrictions. February capacity (available seat kilometers or ASKs) fell 8.7% as airlines scrambled to trim capacity in line with plunging traffic, and load factor fell 4.8 percentage points to 75.9%.

“Airlines were hit by a sledgehammer called COVID-19 in February. Borders were closed in an effort to stop the spread of the virus. And the impact on aviation has left airlines with little to do except cut costs and take emergency measures in an attempt to survive in these extraordinary circumstances. The 14.1% global fall in demand is severe, but for carriers in Asia-Pacific the drop was 41%. And it has only grown worse. Without a doubt this is the biggest crisis that the industry has ever faced,” said Alexandre de Juniac, IATA’s Director General and CEO.

February 2020 (% year-on-year)

World share1

RPK

ASK

PLF (%-pt)2

PLF (level)3

Total Market 

100.0%

-14.1%

-8.7%

-4.8%

75.9%

Africa

2.1%

-0.7%

5.1%

-3.9%

66.8%

Asia Pacific

34.7%

-41.3%

-28.2%

-15.1%

67.8%

Europe

26.8%

0.7%

1.2%

-0.5%

81.3%

Latin America

5.1%

3.1%

3.5%

-0.3%

81.2%

Middle East

9.0%

1.7%

1.5%

0.1%

72.5%

North America

22.2%

5.5%

4.7%

0.6%

81.1%

1% of industry RPKs in 2019  2Year-on-year change in load factor 3Load Factor Level

 

International Passenger Markets

February international passenger demand fell 10.1% compared to February 2019, the worst outcome since the 2003 SARS outbreak and a reversal from the 2.6% traffic increase recorded in January. Europe and Middle East were the only regions to see a year-over-year traffic rise. Capacity fell 5.0%, and load factor plunged 4.2 percentage points to 75.3%.
 

  • Asia-Pacific airlines’ February traffic plummeted 30.4% compared to the year-ago period, steeply reversing a 3.0% gain recorded in January. Capacity fell 16.9% and load factor collapsed to 67.9%, a 13.2-percentage point drop compared to February 2019.
     
  • European carriers’ February demand was virtually flat compared to a year ago (+0.2%), the region’s weakest performance in a decade. The slowdown was driven by routes to/from Asia, where the growth rate slowed by 25 percentage points in February, versus January. Demand  in markets within Europe performed solidly despite some initial flight suspensions on the routes to/from Italy. However, March data will reflect the impact of the spread of the virus across Europe and the related disruptions to travel. February capacity rose 0.7%, and load factor slipped 0.4 percentage point to 82.0%, which was the highest among regions.
     
  • Middle Eastern airlines posted a 1.6% traffic increase in February, a slowdown from the 5.3% year-over-year growth reported in January largely owing to a slowdown on Middle East-Asia-Pacific routes. Capacity increased by 1.3%, and load factor edged up 0.2 percentage point to 72.6%.  
     
  • North American carriers had a 2.8% traffic decline in February, reversing a 2.9% gain in January, as international entry restrictions hit home and volumes on Asia-North America routes plunged 30%. Capacity fell 1.5%, and load factor dropped 1.0 percentage point to 77.7%.
     
  • Latin American airlines experienced a 0.4% demand drop in February compared to the same month last year. This actually was an improvement over the 3.5% decline recorded in January. However, the spread of the virus and resulting travel restrictions will be reflected in March results. Capacity also fell 0.4% and load factor was flat compared to February 2019 at 81.3%. 
     
  • African airlines’ traffic slipped 1.1% in February, versus a 5.6% traffic increase recorded in January and the weakest outcome since 2015. The decline was driven by around a 35% year-on-year traffic fall in the Africa-Asia market. Capacity rose 4.8%, however, and load factor sagged 3.9 percentage points to 65.7%, lowest among regions.

Domestic Passenger Markets

Demand for domestic travel dropped 20.9% in February compared to February 2019, as Chinese domestic market collapsed in the face of the government lockdown. Domestic capacity fell 15.1% and load factor dropped 5.6 percentage points to 77.0%. 

February 2020 (% year-on-year)

World share1

RPK

ASK

PLF (%-pt)2

PLF (level)3

Domestic

36.2%

-20.9%

-15.1%

-5.6%

77.0%

Australia

0.8%

-4.0%

-1.2%

-2.2%

75.6%

Brazil

1.1%

3.8%

4.3%

-0.4%

82.0%

China P.R.

9.8%

-83.6%

-70.4%

-39.3%

48.5%

India

1.6%

8.4%

9.9%

-1.2%

88.1%

Japan

1.1%

-2.8%

3.9%

-4.7%

67.1%

Russian Fed.

1.5%

7.7%

9.1%

-1.0%

75.7%

US

14.0%

10.1%

8.3%

1.3%

82.9%

 

1% of industry RPKs in 2019  2Year-on-year change in load factor 3Load Factor Level

 

  • Chinese airlines’ domestic traffic fell 83.6% in February, the worst outcome since IATA began tracking the market in 2000. With the easing of some restrictions on internal travel in March, domestic demand is showing some tentative signs of improvement. 
     
  • US airlines enjoyed one of their strongest months in February, as domestic traffic jumped 10.1%. Demand fell  toward the end of the month, however, with the full impact of COVID-19 expected to show in March results.

The Bottom Line

“This is aviation’s darkest hour and it is difficult to see a sunrise ahead unless governments do more to support the industry through this unprecedented global crisis. We are grateful to those that have stepped up with relief measures, but many more need to do so. Our most recent analysis shows that airlines may burn through $61 billion of their cash reserves during the second quarter ending 30 June 2020. This includes $35 billion in sold-but-unused tickets as a result of massive flight cancellations owing to government-imposed travel restrictions. We welcome the actions of those regulators who have relaxed rules so as to permit airlines to issue travel vouchers in lieu of refunds for unused tickets; and we urge others to do the same. Air transport will play a much-needed role in supporting the inevitable recovery. But without additional government action today, the industry will not be in a position to help when skies are brighter tomorrow,” said de Juniac.


Read the February Air Passenger Market Analysis (pdf)

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