Most Airline Chiefs See Decreased Staffing Levels Over the Next Year
The International Air Transport Assocation's July 2020 survey of airline CFOs and Heads of Cargo confirmed that recovery in demand likely to be slow and 55% of respondents expect to have to decreased employment levels over the coming 12 months.
Respondents indicated that the scope of their business operations was likely to be smaller due to the pandemic in the near-term and therefore airlines would need to focus on cutting costs further mainly in the form of lay offs.
According to the survey, the aviation industry has experienced the sharpest quarterly fall in demand and profits since the global financial crisis.
Moreover, weakness in profitability is expected to be maintained over the next twelve months. In Q2 2020, passenger demand collapsed while cargo demand improved slightly following a sharp decline in the previous quarter.
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Passenger and cargo yield developments continued to diverge in Q2. Passenger yields fell due to the lack of demand, while cargo yields continued to increase reflecting the lack of cargo capacity from the grounding of much of the passenger fleet.
For the year ahead, the majority of respondents expect airfares to decrease in order to stimulate demand.
Similarly, cargo yields are generally expected to unwind with the return of bellyhold cargo capacity.
Expectations for input costs are mixed. While low fuel prices and cost cutting programs were supportive, unit costs face upwards pressure from weak demand and accordingly low load factor levels.
A majority of respondents (42%) expect the demand recovery to pre-crisis levels will take longer than two years. Only 19% expect to see a recovery within 6-12 months.
Asia Pacific and Europe are the regions expected to recover first, while the North and Latin America regions are expected to return to 2019 levels of demand later than elsewhere.
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