Effects of Novel Coronavirus (COVID‐19) on Civil Aviation: Economic Impact Analysis Montréal, Canada 22 September 2021 Economic Development – Air Transport Bureau Contents • Executive Summary: • Estimated 2020 Results • Appendix Economic Impact in Brief and 2021 Outlook: A. Overview of Early Impact Global • Scenario Building B. Scenario Assumptions in • Estimated 2020 Results Detail – Analytical consideration and 2021 Outlook: C. Estimated Results at – Shapes of Economic Regional Breakdown Route Group Level Recession and Recovery D. Summary of Analysis by –Africa Other Organizations – Indicative Scenarios and – Asia/Pacific Paths Forward – Europe – Latin America/Caribbean –Middle East –North America 2 Executive Summary: Economic Impact in Brief 2021 figures and estimates herein are subject to substantial changes, and will be updated with the situation evolving and more information available. 3 World passenger traffic collapses with unprecedented decline in history World passenger traffic evolution 1945 – 2021* ‐47 to ‐49% decline in world total passengers in 2021* vs. 2019 ‐60% decline in world total passengers in 2020 Source: ICAO Air Transport Reporting Form A and A‐S plus ICAO estimates. 4 Year 2020 results and 2021 outlook: World total passenger traffic The COVID-19 impact on world scheduled passenger traffic for year 2020 (estimated actual results), compared to 2019 levels: – Overall reduction of 50% of seats offered by airlines – Overall reduction of 2,699 million passengers (-60%) – Approx. USD 371 billion loss of gross passenger operating revenues of airlines The COVID-19 impact on world scheduled passenger traffic for year 2021 (preliminary estimates), compared to 2019 levels: – Overall reduction of 39% to 40% of seats offered by airlines – Overall reduction of 2,125 to 2,203 million passengers (-47% to -49%) – Approx. USD 313 to 324 billion loss of gross passenger operating revenues of airlines 5 Year 2020 results and 2021 outlook: International and domestic passenger traffic International passenger traffic (2020, vs. 2019) Domestic passenger traffic (2020, vs. 2019) – Overall reduction of 66% of seats offered by – Overall reduction of 38% of seats offered by airlines airlines – Overall reduction of 1,376 million – Overall reduction of 1,323 million passengers (-74%) passengers (-50%) –Approx. USD 250 billion loss of gross –Approx. USD 120 billion loss of gross operating revenues of airlines operating revenues of airlines International passenger traffic (2021, vs. 2019) Domestic passenger traffic (2021, vs. 2019) – Overall reduction of 61% to 63% of seats – Overall reduction of 23% to 24% of seats offered by airlines offered by airlines – Overall reduction of 1,324 to 1,364 million – Overall reduction of 801 to 838 million passengers (-72% to -74%) passengers (-30% to -32%) –Approx. USD 248 to 255 billion loss of –Approx. USD 66 to 69 billion loss of gross gross operating revenues of airlines operating revenues of airlines 6 Year 2021 outlook: Due to uncertainty, consider 4 different paths Scenarios for passenger seat capacity 0% Outlook 2021 (compared to 2019 levels) Actual 0% Scenario 1 ‐20% Scenario 1a Scenario 2 ‐10% Scenario 2a ‐40% Reference ‐20% ‐60% ‐30% ‐80% ‐40% ‐100% ‐50% Jul 20 Jul 21 Jan 20 Jan 21 Jun 20 Jun 21 Oct 20 Oct 21 Apr 20 Apr 21 Feb 20 Sep 20 Feb 21 Sep 21 Dec 20 Dec 21 Aug 20 Aug 21 Nov 20 Nov 21 Mar 20 Mar 21 May 20 May 21 ‐60% Scenarios for passenger number ‐70% 0% Actual Scenario 1 ‐80% ‐20% Scenario 1a Jan 21 Feb 21 Mar 21 Apr 21 May 21 Jun 21 Jul 21 Aug 21 Sep 21 Oct 21 Nov 21 Dec 21 Scenario 2 Scenario 2a ‐40% Seat capacity (Low) Seat capacity (High) Reference Passenger number (Low) Passenger number (High) ‐60% ‐80% The actual impacts will depend on duration and magnitude of the outbreak ‐100% and containment measures, the degree of consumer confidence for air travel, Jul 21 Jul 20 and economic conditions, etc. Jan 21 Jan 20 Jun 21 Jun 20 Oct 21 Oct 20 Apr 21 Apr 20 Sep 21 Feb 21 Sep 20 Feb 20 Dec 21 Dec 20 Aug 21 Aug 20 Nov 21 Nov 20 Mar 21 Mar 20 May 21 May 20 7 Moderate recovery in domestic travel while international travel remained stagnant Monthly passenger numbers in 2020‐21 vs. 2019 450 400 350 300 250 200 150 Passenger Numbers (million) 100 50 0 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21 Jun 21 Jul 21 Aug 21 International Domestic 2019 total Source: ICAO estimates 8 Regional difference in resilience and speed of recovery Comparison of total seat capacity by region (7‐day average, YoY compared to 2019) 40% Africa 20% Asia/Pacific Europe 0% Latin America/Caribbean Middle East ‐20% North America ‐40% ‐60% ‐80% ‐100% Source: ICAO ADS‐B 9 Estimated impact on passenger traffic and revenues by region for 2020 Capacity: ‐58% Capacity: Passenger: ‐43% ‐769 million Passenger: Capacity: Revenue (USD): ‐599 million ‐45% ‐100 billion Revenue (USD): Passenger: ‐88 billion ‐921 million Revenue (USD): ‐120 billion Capacity: Capacity: ‐60% ‐58% Capacity: Passenger: Passenger: ‐53% ‐132 million ‐78 million Passenger: Revenue (USD): Revenue (USD): ‐199 million ‐22 billion ‐14 billion Revenue (USD): ‐26 billion Note: Compared to 2019 Source: ICAO estimates 10 Global impact of COVID‐19 on aviation, tourism, trade and economy in 2020 • Air passenger traffic: An overall reduction of air passengers (both international and domestic) ranging from 60% in 2020 compared to 2019 (by ICAO) • Airports: An estimated loss of approximately 64.6% of passenger traffic and 66.3% or over USD 125 billion airport revenues in 2020 compared to business as usual (by ACI) • Airlines: A 65.9% decline of revenue passenger kilometres (RPKs, both international and domestic) in 2020 compared to 2019 (by IATA) • Tourism: A decline in international tourism receipts of USD 1.3 trillion in 2020, compared to the USD 1.5 trillion generated in 2019 (by UNWTO) • Trade: A fall of global merchandise trade volume by 5.3% in 2020 compared to 2019 (by WTO) • Global economy: An estimated -3.2% to -3.5% contraction in world GDP in 2020, far worse than during the 2008–09 financial crisis (by IMF and World Bank) 11 Scenario Building 12 Scope of analysis • Analysis focuses on simultaneous supply shock and drop in demand – in a near-term, i.e. monthly profile from January 2020 to December 2021 – in terms of scheduled passenger traffic globally • Taking into account the heterogeneity, distinction is made: – between international and domestic – by month (seasonality) – by six (6) geographical region and/or 50 route groups used in ICAO’s long-term traffic forecasts (LTF) • Analysis is based on forward-looking scenarios, which will be continuously adjusted and updated 13 Analytical Consideration • Geographical disparity of international-domestic passenger traffic mix • Difference in market size among regions • Potential difference in resilience and speed of recovery • Outbreak timing that impacts when traffic would bottom out • Gap between what is scheduled and actual operations 14 International share of passenger traffic decreased in all regions in 2020 vs. 2019 Share of international‐domestic passenger traffic by region (2020 vs. 2019, based on from/to State) Source: ICAO long‐term traffic forecasts, ADS‐B and estimates 15 Europe and Asia/Pacific accounted for around 70% of the world international traffic in 2020 Number of international passengers by region (2020 vs. 2019, based on from/to State) 2020 share Source: ICAO long‐term traffic forecasts, ADS‐B and estimates 16 China overtook North America with 30% of world domestic passengers in 2020 Number of domestic passengers by Route Group (2020 vs. 2019) 2020 share Source: ICAO long‐term traffic forecasts, ADS‐B and estimates 17 Domestic passenger traffic often exhibits more resilience than international Asia/Pacific and North America have experienced 20% to 25% less decline in domestic passenger traffic than international International seat capacity reduction Domestic seat capacity reduction (7‐day average, YoY compared to 2019) (7‐day average, YoY compared to 2019) 20% 60% Africa Africa 40% Asia/Pacific Asia/Pacific 0% Europe Europe 20% Latin America/Caribbean Latin America/Caribbean ‐20% Middle East Middle East 0% North America North America ‐40% ‐20% ‐40% ‐60% ‐60% ‐80% ‐80% ‐100% ‐100% Source: ICAO ADS‐B operation data 18 Domestic passenger traffic is recovering ahead of international Domestic passenger traffic in China exceeded 2019 level from Autumn 2020 but experienced “drop” several times in 2021 due to new outbreaks and strict restrictions Source: ICAO ADS‐B operation data 19 The outbreak timing impacts when domestic traffic bottoms out in each region Capacity evolution of two largest domestic markets China and United States since January 2020 Source: ICAO ADS‐B operation data 20 For international passenger traffic, share of Intra‐Region traffic decreased in 2020 Share of Intra‐Region and Inter‐Region passenger traffic by region (2020 vs. 2019, based on from/to State, share of international traffic) Source: ICAO long‐term traffic forecasts, ADS‐B and estimates 21 A large gap exists between what is scheduled and actual operations Airlines announced/planned resumption of flights, however, over half of which were subsequently withdrawn International schedules Domestic schedules 200 300 28‐Dec‐20 28‐Dec‐20 14‐Dec‐20 14‐Dec‐20 23‐Nov‐20 23‐Nov‐20 02‐Nov‐20 02‐Nov‐20 12‐Oct‐20 12‐Oct‐20 21‐Sep‐20 21‐Sep‐20 150 250 31‐Aug‐20 31‐Aug‐20 10‐Aug‐20 10‐Aug‐20 20‐Jul‐20 20‐Jul‐20 29‐Jun‐20 29‐Jun‐20 08‐Jun‐20 08‐Jun‐20