Interview, Fireside Chat
The Outlook for Airlines in 2021
- Passenger demand is forecast to remain just under 60% below year-ago levels for the current week, with the third quarter of 2020 revenue projected to decline just over 60% year-over-year.
- The airline industry is expected to incur adjusted losses of just over $24 billion for the year-to-date period through the third quarter of 2020.
- Demand is anticipated to improve modestly from September to the present despite rising U.S. COVID-19 cases, though full demand rebound to 2019 levels is not forecasted until 2023.
- For 2021, overall demand is projected to be about one-third lower than 2019 levels driven by vaccination delays in the first half, with fourth-quarter exit rates expected to be only 20% below 2019 figures.
- Future industry consolidation is likely to occur among smaller airlines due to regulatory hurdles preventing similar moves among the top four market players.
- Airlines are expected to prioritize paying down debt, which may slow short-term innovation and delay medium-term plans while profitability recovery to pre-COVID levels is delayed by increased debt loads.
- Ticket prices are projected to remain lower over the next couple of years due to a slower corporate travel recovery and more intense competition.
- U.S. carriers intend to right-size operations by retiring 8% of their 2019 fleet, with the total U.S. fleet expected to be only 2% smaller by the end of 2021 as new aircraft deliveries are maintained.
- While business models and profitability levels are expected to eventually return to normal, the future status of eliminated change fees for most fare classes remains uncertain.