‘Global airline sector set for a rebound’

The rating agency expects the industry to sustain operating losses and negative operating margins for all of 2021, although to a lesser degree than in 2020.Premium
The rating agency expects the industry to sustain operating losses and negative operating margins for all of 2021, although to a lesser degree than in 2020.
 2 min read . Updated: 12 May 2021, 12:40 AM IST Rhik Kundu

Credit rating agency Moody's Investor Service on Tuesday changed the outlook for the global airline industry to positive from negative stating that vaccinations will drive strong growth in travel demand over the next 12-18 months.

"We expect this positive demand trend to run for many quarters, into 2023. Increasing coronavirus vaccinations around the globe will allow governments to lower barriers to entry for visitors and reentry for residents returning home," Moody's Investor Service said in a report.

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"Leisure traffic will lead the charge to the boarding gates, while corporate trips and international long-haul will follow, initially at slower paces. The restoration of the ability to travel will relieve the tremendous pent-up demand to fly to visit friends and relatives and for vacations," it added.

However, pace of recovery is expected to vary across geographies and increasing vaccinations will be critical for restoring and sustaining passenger airline operations in countries like India, which has recently seen a surge in coronavirus infection.

"We are making this change notwithstanding the record high daily infection rate in India; travel restrictions in countries with large amounts of traffic to and from India, such as Dubai and Singapore; and coronavirus lock-downs in other countries, including Canada, Germany and Turkey," it said.

"Increasing vaccinations will be critical for restoring and sustaining passenger airline operations in these countries and across the globe," it added.

The rating agency however expects the industry to sustain operating losses and negative operating margins for all of 2021, although to a lesser degree than in 2020.

“While the continuing pandemic means there is a risk of further disruption to air travel in various countries at various times, we expect increasing vaccinations will lower border restrictions and

increase demand for air travel over the next 12 to 18 months," said Jonathan Root, a Moody’s Senior Vice President.

“ With offices in many countries opening by fall 2021, this will facilitate the beginning of the corporate travel recovery," added Root.

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