MIAMI – There is no doubt that 2020 has been a difficult year for the global aviation market. With the world in near-total lockdown for several months during Q1, Q2, and Q3, industry losses are set to top more than US$84bn by the end of the year according to businessinsider.com.
This equates to a contraction of -20.1% and will firmly cement this year as the worst year in the history of modern aviation. However, while no one can predict the next few months, things could be looking a bit rosier come 2021.
The Worst Could Be behind Us
Industry insiders believe that we could have put the worst traffic collapse behind us as many countries have adopted restart measures as a part of a long-term strategy. The introduction of measures, including an agreement with the International Civil Aviation Organization to keep crew and passengers safe and contact tracing, is set to increase confidence.
With more than 10% of the global GDP derived from tourism, this is good news for the economy. While we are unlikely to see soaring numbers of tourists any time soon, a gradual and steady number of passengers is what airlines need to stay in the air.
Demand Set to Increase
As we move into the new year and borders remain open, demand is expected to pick up once again. Projections at the moment are pegged at around $15.8 billion – a significant decrease from what we’ve seen this year. The world’s airlines will be in ‘recovery mode’ but will still have a way to go before they hit pre-pandemic levels.
As estimated by www.iata.org/en/pressroom/, there will be around 3.4 billion passengers in 2021 if things remain the same in terms of the pandemic. This is at the same level we saw in 2014 but well below the 4.54 billion we saw take to the skies in 2019. Revenue wise, globally it could potentially reach $600 billion, which will be a big increase on 2020, but 29% below what was brought in during 2019. Cargo will remain profitable however, with a 25% increase on 2020 to $138 billion. Demand is expected to continue growing as businesses restock and replenish after the new year.
The Stock Market Response
And what about airline performance on the stock market? During the first stages of lockdown, airlines and air freight companies saw billions wiped off their value. Prior to the pandemic, airline stocks were cheap but the global crisis just made things worse. With many on the brink of declaring bankruptcy, central banks stepped in to provide emergency aid and loans that would probably never be repaid.
Now investors are left wondering which stocks will bounce back in 2021 and offer a return on investments. The silver lining is that while the pandemic saw the share price of the world’s biggest airlines plummet, the market is now prime for those that want to snap up a bargain. As showcased at https://buyshares.co.uk/trading, online platforms allow prospective traders to check out what options are available and which airlines can be potentially invested in. You can evaluate the performance of different stocks, see which airlines are available for trading with, and decide if it’s something you want to go for.
Remember though, there are no certainties with the stock market, and we are yet to see how the world will cope this winter. The fact remains that there are some great opportunities to be had for those willing to do the research and remain patient.
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