The International Air Transport Association (IATA) reports the recovery in air travel slowed for both domestic and international in January 2022 compared to December 2021, owing to the imposition of travel restrictions following the emergence of Omicron last November, with global air cargo markets also showing slower growth. Total demand for air travel in January 2022 (measured in revenue passenger kilometres or RPKs) was up 82.3% compared to January 2021. However, it was down 4.9% compared to the previous month (December 2021) on a seasonally adjusted basis.
January domestic air travel was up 41.5% compared to the year-ago period but fell 7.2% compared to December 2021 on a seasonally adjusted basis.
International RPKs rose 165.6% versus January 2021 but fell by 2.2% month-on-month between December 2021 and January 2022 on a seasonally adjusted basis.
Willie Walsh (above), IATA's Director General said: "The recovery in air travel continued in January, despite hitting a speed bump called Omicron. Strengthened border controls did not stop the spread of the variant. But where population immunity was strong, the public health systems were not overwhelmed. Many governments are now adjusting COVID-19 polices to align with those for other endemic viruses. This includes lifting travel restrictions that have had such a devastating impact on lives, economies and the freedom to travel."
International Passenger Markets
European carriers’ January international traffic rose 225.1% versus January 2021, which was up slightly compared to a 223.3% increase in December 2021 versus the same month in 2020. Capacity rose 129.9% and load factor climbed 19.4 percentage points to 66.4%.
Asia-Pacific airlines saw their January international traffic climb 124.4% compared to January 2021, down significantly from the 138.5% gain registered in December 2021 versus December 2020. Capacity rose 54.4% and the load factor was up 14.7 percentage points to 47.0%, still the lowest among regions.
Middle Eastern airlines had a 145.0% demand rise in January compared to January 2021, well down compared to the 178.2% increase in December 2021, versus the same month in 2020. January capacity rose 71.7% versus the year-ago period, and load factor climbed 17.5 percentage points to 58.6%.
North American carriers experienced a 148.8% traffic rise in January versus the 2021 period, significantly decreased versus the 185.4% rise in December 2021 compared to December 2020. Capacity rose 78.0%, and load factor climbed 17.0 percentage points to 59.9%.
Latin American airlines saw a 157.0% rise in January traffic, compared to the same month in 2021, an upturn over the 150.8% rise in December 2021 compared to December 2020. January capacity rose 91.2% and load factor increased 19.4 percentage points to 75.7%, which easily was the highest load factor among the regions for the 16th consecutive month.
African airlines’ traffic rose 17.9% in January 2022 versus a year ago, a slowdown compared to the 26.3% year-over-year increase recorded in December 2021. January 2022 capacity was up 6.3% and load factor climbed 6.0 percentage points to 60.5%.
Domestic Passenger Markets
Japan’s domestic demand was up 107%, which was the fastest year-on-year growth recorded, although on a seasonally adjusted basis, January 2022 traffic slipped 4.1% from December.
India’s domestic RPKs fell by 18% year-on-year in January , which the biggest decline recorded for any of the domestic markets tracked by IATA. On a month-on-month basis, seasonally adjusted RPKs dropped by nearly 45% between December and January.
2022 vs 2019
Despite the strong traffic growth recorded in January 2022 compared to a year ago, passenger demand remains far below pre-COVID-19 levels. Total RPKs in January were down 49.6% compared to January 2019. International traffic was down 62.4%, with domestic traffic off by 26.5%.
January figures do not include any impact from the Russia-Ukraine conflict which began at the end of February. The resulting sanctions and airspace closures are expected to have a negative impact on travel, primarily among neighboring countries.
The Ukraine market accounted for 3.3% of European passenger traffic and 0.8% of global traffic in 2021.
The Russian international market represented 5.7% of European traffic (excluding Russia domestic market) and 1.3% of global traffic in 2021.
Airspace closures have led to rerouting or cancellations of flights on some routes, mostly in the Europe-Asia but also in Asia-North America market. This impact is mitigated owing to greatly diminished flight activity since borders in Asia were largely closed owing to COVID-19. In 2021, RPKs flown between Asia-North America and Asia-Europe accounted for 3.0% and 4.5%, respectively, of global international RPKs.
In addition to these disruptions, the sudden spike in fuel prices is putting pressure on airline costs.
"When we made our most recent industry financial forecast last autumn, we expected the airline industry to lose $11.6 billion in 2022 with jet fuel at $78/barrel and fuel accounting for 20% of costs. As of 4 March, jet fuel is trading at over $140/barrel. Absorbing such a massive hit on costs just as the industry is struggling to cut losses as it emerges from the two-year COVID-19 crisis is a huge challenge. If the jet fuel price stays that high, then over time, it is reasonable to expect that it will be reflected in airline yields," said Walsh.
“The past few weeks have seen a dramatic shift by many governments around the world to ease or remove COVID-19-related travel restrictions and requirements as the disease enters its endemic phase. It’s vital that this process continue and even accelerate, to more quickly restore damaged global supply chains and enable people to resume their lives. One step to encourage a return to normality is to remove mask mandates for air travel. It makes no sense to continue to require masks on airplanes when they are no longer being required in shopping malls, theatres or offices. Aircraft are equipped with highly sophisticated hospital quality filtration systems and have much higher air flow and air exchange rates than most other indoor environments where mask mandates already have been removed,” said Walsh.
Data for global air cargo markets showed slower growth in January 2022. Supply chain disruptions and capacity constraints, as well as a deterioration in economic conditions for the sector, dampened demand. Cargo demand is tracking above pre-COVID-19 levels, although capacity is still constrained.
Global demand, measured in cargo tonne-kilometres (CTKs*), was up 2.7% compared to January 2021 (3.2% for international operations). This was significantly lower than the 9.3% growth seen in December 2021 (1% for international operations).
Capacity was 11.4% above January 2021 (10.8% for international operations). While this is in positive territory, compared to pre-COVID-19 levels, capacity remains constrained, 8.9% below January 2019 levels.
Supply chain disruptions as well as a deterioration in economic conditions for the sector are slowing growth. Several factors should be noted:
Supply chain disruptions resulted from flight cancellations due to labor shortages, winter weather and to a lesser extent the deployment of 5G in the USA, as well as the zero-COVID policy in mainland China and Hong Kong.
The Purchasing Managers’ Index (PMI) indicator tracking global new export orders fell below the 50-mark in January for the first time since August 2020, indicating that a majority of surveyed businesses reported a fall in new export orders.
The January global Supplier Delivery Time Purchasing Managers Index (PMI) was at 37.8. While values below 50 are normally favorable for air cargo, in current conditions it points to delivery times lengthening because of supply bottlenecks.
The inventory-to-sales ratio remains low. This is positive for air cargo as it means manufacturers may turn to air cargo to rapidly meet demand.
Walsh said: “Demand growth of 2.7% in January was below expectation, following the 9.3% recorded in December. This likely reflects a shift towards the more normal growth rate of 4.9% expected for this year. Looking ahead, however, we can expect cargo markets to be impacted by the Russia-Ukraine conflict. Sanction-related shifts in manufacturing and economic activity, rising oil prices and geopolitical uncertainty are converging. Capacity is expected to come under greater pressure and rates are likely to rise. To what extent, however, it is still too early to predict.”
Russia Ukraine Conflict
The Russia Ukraine conflict will have a negative impact on air cargo. Airspace closures will stop direct connectivity to many markets connected to Russia. Overall, the impact on global markets is expected to be low as cargo carried to/from/within Russia accounted for just 0.6% of the global cargo carried by air in 2021. Several specialized cargo carriers are registered in Russia and Ukraine, particularly those involved with heavy lift operations.
January Regional Performance
Asia-Pacific airlines saw their air cargo volumes increase 4.9% in January 2022 compared to the same month in 2021. This was significantly below the previous month’s 12.0% expansion. Available capacity in the region was up 11.4% compared to January 2021, however it remains heavily constrained compared to pre-COVID-19 levels, down 15.4% compared to 2019. The zero-COVID policy in mainland China and Hong Kong is impacting performance. Preparations for the Lunar New Year holiday may have also had an impact on volumes, but it is difficult to isolate.
North American carriers posted a 1.2% decrease in cargo volumes in January 2022 compared to January 2021. This was significantly below December’s performance (7.7%). Supply chain congestion due to labour shortages, severe winter weather and issues with the deployment of 5G as well as a rise in inflation and weaker economic conditions affected growth. Capacity was up 8.7% compared to January 2021.
European carriers saw a 7.0% increase in cargo volumes in January 2022 compared to the same month in 2021. While this was slower than the previous month (10.6%), Europe was more resilient than most other regions. European carriers benefited from robust economic activity and an easing in capacity. Capacity was up 18.8% in January 2022 compared to January 2021, and down 8.1% compared to pre-crisis levels (2019).
Middle Eastern carriers experienced a 4.6% decrease in cargo volumes in January 2022. This was the weakest performance of all regions and a drop in performance compared to the previous month (2.2%). This was due to a deterioration in traffic on several key routes such as Middle East-Asia, and Middle East-North America. Capacity was up 6.2% compared to January 2021 but remains constrained compared to pre-COVID-19 levels, down 11.8% compared to the same month in 2019.
Latin American carriers reported an increase of 11.9% in cargo volumes in January 2022 compared to the 2021 period. This was a decline from the previous month’s performance (19.4%). Capacity in January was down 12.9% compared to the same month in 2021 and remains well below compared to pre-COVID-19 levels, down 28.9% versus 2019.
African airlines’ saw cargo volumes increase by 12.4% in January 2022 compared to January 2021. The region was the strongest performer. Capacity was 13.0% above January 2021 levels.
Note: IATA has returned to year-on-year traffic comparisons, instead of comparisons with the 2019 period, unless otherwise noted. Owing to the low traffic base in 2021, some markets will show very high year-on-year growth rates, even if the size of these markets is still significantly smaller than they were in 2019.