This archive report was first published on 13 May 2020.
Published on May 13, 2020, the International Air Transport Association (IATA) has warned that introducing social distancing measures in the aviation sector could lead to a 38% reduction in seat capacities and a 43% increase in airfare for airlines in Africa and the Middle East.
The association's analysis of airfares once travel restrictions ease suggests that airlines will be caught between low demand, excess capacity, and low fuel prices, which should translate to lower fares. However, proposed social distancing measures that require the middle seat to be left unoccupied and an increase in turnaround times due to sanitization procedures will push unit costs up, making an increase in airfares necessary.
IATA chief economist Brian Pearce stated that if airlines don't increase ticket prices, many will fold. The measures sharply reduce the maximum load factor to 62%, which is below the average industry break-even load factor of 77%. With fewer seats to sell, unit costs would rise sharply, translating into fare increases of between 43-54% compared to 2019, depending on the region.
IATA's director-general and chief executive Alexandre de Juniac emphasized that 'airlines are fighting for their survival. Eliminating the middle seat will raise costs. If that can be offset with higher fares, the era of affordable travel will come to an end. On the other hand, if airlines can't recoup the costs in higher fares, airlines will go bust.'
