FITCH RATINGS expects conditions for global airlines to improve in 2022 albeit off of a low base as the industry continues a slow recovery from the pandemic trough.
Rising vaccine coverage, particularly in large economies that provide much of the base for air travel demand, along with loosening border restrictions are expected to drive a material rebound in traffic.
“However, potential outbreaks, lingering restrictions, and a slower rebound in business travel will keep travel below 2019 levels until 2024,” the rating agency pointed out.
“Fitch does not expect the recovery to be linear and developments around coronavirus variants are likely to drive setbacks. While demand is improving, rising costs will present a material headwind.”
While our overall outlook is positive, significant industry risks remain, according to Fitch Ratings.
“Business and international travel remain key variables in the recovery of global air traffic. While Fitch expects a significant recovery in business travel driven by companies returning to office and growing Zoom fatigue, the degree of the recovery remains uncertain,” predicted the rating agency.
Lower levels of business demand may contribute to margin pressures as the business cabin is typically the highest margin contributor, particularly for legacy carriers.
“Border restrictions which are key impediments to international travel had been easing but the trend can easily reverse depending on outbreaks of new variants as seen in recent days with the omicron variant,” added Fitch Ratings. – Dec 13, 2021
