International airlines top ‘strugglers’ ranking

Global airlines are seen as most likely to underperform in the next year. Cotton and buy now, pay later are tipped to do well.

Easing the risks of transmission are seen as key to restoring confidence in air travel. Picture: AFP

In more grim news for the aviation industry, international airlines have been ranked as the industry most likely to underperform in the next year as a result of the COVID-19 crisis.

The IBISWorld analysis reviewed over 750 industries to come up with the five most likely to fly in 2020-21 and those most likely to fall.

Cotton growing, debt collection, water freight transport, buy now pay later and data storage services were forecast to be the strongest performers in the next 12 months.

Australia’s cotton growing industry was projected to grow by 128.8 per cent to $961.8m, aided by above average rainfall in the Murray Darling Basin in the six months to June.

The outlook was much different for international airlines, with revenues forecast to decline 31.5 per cent to $14.3bn, on the back of a 28 per cent fall in 2019-20.

“The COVID-19 crisis has essentially brought industry activities to a halt,” said the report.

“In the first month of fully closed international borders (April 2020) only 69,000 people took international flights, a 98 per cent decline from April 2019. Low air travel demand is expected to persist throughout 2020-21.”

Qantas has already scratched international flights until the end of March, and does not expect to operate services in significant numbers until July, unless a COVID-19 vaccine becomes available.

Virgin Australia is even less likely to fly internationally as the airline’s administrators and prospective new owners Bain Capital seek to restructure the debt-saddled carrier.

The IBISWorld report came as Singapore Airlines released its June 2020 operating results, showing a 99.3 per cent decline in passengers carried, and an average load factor of just 12.4 per cent.

A statement from the Singapore Airlines Group, which includes Silk Air and Scoot, said a material operating loss was expected for the first quarter of the 2021 financial year.

“The group continues to actively pursue cost management measures and options to conserve cash and retains the flexibility to raise further liquidity as necessary,” said the statement.

“A task force has been set up to ensure that all aspects of our operations, products and services are reviewed and refined in accordance with the requirements and customer value drivers of a post COVID-19 world.”

Auckland International Airport also released its May and June trading update, showing a slight improvement in passenger numbers last month, as opposed to May.

Overall passenger numbers were down 84.9 per cent in June, after plunging 94.7 per cent in May, following the lifting of all domestic travel restrictions in New Zealand.

National carrier Air New Zealand aimed to restore domestic services to 55 per cent of pre-COVID levels in July.

A recent survey undertaken by the International Air Transport Association (IATA) found passengers remained nervous about air travel, due to crowds at airports, the confined space on board aircraft and concerns about air quality.

Although just under half or 45 per cent said they would return to air travel within months of the pandemic easing, the figure was a significant drop on the 61 per cent recorded in April.

The three things that would improve their confidence in air travel included COVID screening at airports, the mandatory wearing of face masks and social distancing on aircraft.

“It is no secret that passengers have concerns about the risk of transmission on board,” said IATA CEO Alexandre de Juniac.

“They should be reassured by the many built-in antivirus features of the air flow system and forward-facing seating arrangements. On top of this, screening before flight and facial coverings are among the extra layers of protection that are being implemented by industry and governments.”

Mr de Juniac said no environment was “risk free” but few were as controlled as the aircraft cabin.

Along with international aviation, the IBISWorld report predicted housing construction, licensed venues, coal mining and management consultants would also face a challenging year ahead.