Battered consumer confidence will slow airlines recovery

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Faltering consumer confidence will slow the recovery of air travel when coronavirus restrictions end, the sector’s main global body warned, citing bleak new survey data.

More airlines are likely to follow Virgin into administration without faster government support, the International Air Transport Association (IATA) predicted and fuel hedging will prevent benefits from cheap oil.

Domestic and short-haul travel will pick up first, IATA said, but the demand upturn is tepid in China and absent in Australia after new COVID-19 cases dwindled.

“Once market travel restrictions and lockdowns are relaxed, there’s an issue about demand from passengers to come back and fly,” IATA Chief Economist Brian Pearce said during an online media presentation.

Domestic air traffic is down 70% worldwide, IATA said.

The Geneva-based organisation expects the near-total shutdown of global aviation to cut industry revenue by more than half, with the $314 billion hit threatening 25 million jobs, and backs airline demands for government support.

Some 40% of air travellers plan to wait at least six months before resuming flying, according to an IATA-commissioned survey and 69% will do so only after personal finances stabilise.

The online poll of 4 700 consumers was conducted by Rockland Dutton with sample sizes of 300-500 in 11 countries.

In Europe, where the cycle of coronavirus spread, containment and travel reopening is lagging behind Asia, major carriers locked in fuel costs through hedging, Pearce said.

Many airlines are “unable to take advantage of low prices even if they were flying”, Pearce said after US crude futures turned negative for the first time in history.

The collapse of Virgin Australia, which entered voluntary administration on Tuesday, shows many airlines will need quicker public support to survive, IATA’s Director General Alexandre de Juniac said.

“Virgin Australia is an illustration of the warning we put forward and the requests put to governments,” he said.