Passenger Traffic Jumps in May on Hefty Discounts on Tickets; IATA Warns of Further Losses

The IATA said that airlines cannot afford such luxuries as the road to recovery is long and discounts could further impact profitability.

The International Air Transport Association (IATA) on Wednesday said that airlines cut domestic fares by almost a fourth last month to lure more people to fly after air traffic hit historic lows in April. However, the IATA also warned that such a move by airlines could further escalate the losses.

The airline industry has been one of the hardest hit due to the coronavirus pandemic as governments put restrictions on travel and locked down countries. Although, many governments have announced rescue packages to bail out the ailing airlines, the crisis is far from over as travel restrictions still continue in most countries.

Airlines Try to Boost Traffic

Airlines on average gave 23% discount on domestic fares to attract more passengers in May Pixabay

The IATA on Wednesday said that airlines cut domestic fares by 23 per cent in May after air traffic picked up historic lows in April. Domestic passenger traffic jumped 30 per cent in May. April was one of the worth months for airlines in history as the industry almost came to a standstill owing to the Covid-19 pandemic.

However, the surge in passenger traffic was a result of heavily discounted ticket prices offered by airlines. IATA said that airlines cannot afford such luxuries at this time to boost passenger traffic as this would further hurt their profitability. Moreover, many airlines have resumed services but are leaving seats vacant in a bid to maintain social distancing among flyers and keeping in mind the safety of passengers and employees.

Airlines Expect to Make Slow Recovery

Domestic passenger traffic jumped 30 per cent in May. (Representational Image) Pixabay

The losses incurred by airlines over the past more than two months have been unprecedented. Although governments have injected billions of dollars into the industry to bail them out, the recovery could take years. Given this situation, offering discounts on tickets would only make the journey difficult for airlines.

"Airlines need cash because of the crisis and they're seeking to encourage passengers into seats by offering low fares," IATA Chief Economist Brian Pearce said. In Europe, low cost airlines like Ryanair and Wizz Air have said that they expect business only after full-service rivals and for that they are going for discount-driven recovery.

Domestic traffic in Asian countries too ha sstarted picking up with many governments finally lifting lockdowns. Passenger traffic in China, South Korea and Vietnam are back to 25 per cent of year-earlier levels. However, in North America, where a rush for tickets start from March, two months ahead of the summer vacations, bookings started picking up only in May.

Related topics : Coronavirus