Air cargo revenues projected to reach new high in 2021

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In its outlook for 2021, the International Air Transport Association (IATA) expects cargo revenuesto reach $152 billion, a historic high. This is up from $128 billion in 2020 and $101 billion in 2019. However, capacity remains constrained owing to the large-scale grounding of the passenger fleet. This removed significant belly capacity, driving up yields 40% in 2020, with a further 5% growth expected in 2021. In 2021, cargo will account for a third of industry revenues. This is significantly above cargos historic contribution, which ranged around 10-15% of total revenues. The improvement in cargo, however, is not able to offset the dramatic decline in passenger revenues, IATA explained in a release.

Overall, it pointed out, cargo outperformed the passenger business throughout the Covid-19 crisis. That trend is expected to continue throughout 2021. Demand for cargo is expected to grow by 13.1% over 2020. This puts the cargo business in positive territory compared to pre-crisis levels (2020 saw a full-year decline of 9.1% compared to 2019). Total cargo volumes are expected to reach 63.1 million tonnes in 2021. Thats nearly at the pre-crisis peak of 63.5 million tonnes which occurred in 2018.

IATA, however, expects net airline industry losses of $47.7 billion in 2021 (net profit margin of -10.4%). This is an improvement on the estimated net industry loss of $126.4 billion in 2020 (net profit margin of -33.9%), the release said.

This crisis is longer and deeper than anyone could have expected. Losses will be reduced from 2020, but the pain of the crisis increases. There is optimism in domestic markets where aviations hallmark resilience is demonstrated by rebounds in markets without internal travel restrictions. Government imposed travel restrictions, however, continue to dampen the strong underlying demand for international travel. Despite an estimated 2.4 billion people travelling by air in 2021, airlines will burn through a further $81 billion of cash, said Mr Willie Walsh, IATAs Director-General.

The outlook points to the start of industry recovery in the latter part of 2021. In the face of the ongoing crisis, IATA has called for plans for a restart in preparation for a recovery; employment support; and cost containment/reduction.