The International Air Transport Association (IATA) recently released its outlook for demand and yields for the coming months based on its quarterly business confidence survey of airline CFOs and heads of cargo showing a "cautious" demand outlook and "weak yield expectations" for the next 12 months.

IATA said for passenger operations, the demand index recovered from an "all-time low" in April 2020 with the easing of travel restrictions in many regions.

However, it warned that those expecting a recovery in demand remain cautious, as "the risks are on the downside in this highly uncertain environment."

Cargo demand

In terms of expectations for cargo, IATA sounded more optimistic noting that cargo expectations "did not decline as much" as they did for passenger demand, as shipments of PPE and other vital supplies supported demand.

"Demand expectations returned to expansion in the post lockdown period as business confidence and activity rebounded," IATA said.

Yield expectations

In terms of yields, IATA noted that "expectations remain weak at around the same levels as during the Global Financial Crisis" between 2007 to the early part of 2009.

"Overall industry profit expectations remain in contraction since the recovery in demand is expected to be gradual, limited and insufficient to offset the expected deterioration in yields," it said. 

For passenger yields, IATA said most of the CFOs and cargo heads expect airlines to offer reduced airfares to help stimulate demand in the recovery period.

For cargo, it said yields are expected to normalize after spiking over the past few months due to lack of capacity.

"Yields soared with the lack of bellyhold capacity in 2Q2020 and are expected to decline as capacity returns to the market," IATA said.

The results of its July Business Confidence Survey also found that airline CFOs and heads of cargo largely expect the timing of recovery to pre-coronavirus levels to happen longer than 24 months.

The Asia Pacific region is expected to return to 2019 levels first, followed by Europe and the Middle East while the same study found that aviation industry players expect North America to recover last, followed by Latin America and Africa.