By Ted Nickerson
To say that commercial aviation has been devastated globally by the COVID19 pandemic would simply be stating the obvious. Millions of jobs and many billions of dollars have been lost. Some airlines may never recover. Now in June 2021, there is light. What is the long-term effect of COVID on global mobility? Will the free movement of people and goods enabled by aviation, and the prosperity and equality it creates, return?
An answer to this question for Canada and the world can be found in statistics.
The graphs and forecasts found later in this document are based on air carrier traffic available from Statistics Canada, as well as forecasts and postings issued by IATA, ICAO, FAA, Airbus and Boeing. “Active” and “Archived” air traffic reports are readily accessible online at the Statistics Canada website. Additional information was requested, and Statistics Canada staff responded promptly.
Aviation in Canada and the Greater Toronto Region is Resilient.
As far back as 1946, commercial aviation in Canada has demonstrated a continuous positive trendline. There have been many major negative events, but aviation has recovered each time.
In 2020, Aviation Went into a Ditch
When COVID19 hit the Toronto Region, commercial aviation was devastated. The reported 2020 full-year passenger traffic dropped to 14 million, a volume not seen since 1979, 40 years ago! And remember January 2020 through most of March 2020 was pretty much business as usual.
After Q1 2020, 90 percent of air traffic disappeared in Canada.
Commercial Aviation’s Path to Recover
In mid-2020, the International Air Transport Association (IATA) predicted that global recovery to the 2019 air traffic level could take up to 4 years. An IATA online posting (May 28, 2021) provided this updated forecast. Global commercial passenger traffic would recover:
- To 52% of the 2019 volume by year-end 2021,
- To 88% by year-end 2022, and
- To 105% by year-end 2023.
The IATA posting stressed that the above are passenger numbers. Revenue Passenger Kilometers (RPK), the total of the distances those passengers travelled, would not return to the 2019 RPK level until year-end 2024. International, long-distance travel will lag until borders can be confidently opened. Some authoritarian governments may use the COVID crisis as an opportunity to permanently add mobility restrictions.
How do predictions by IATA and other global aviation agencies play out in the Toronto region?
First, let’s look at the national experience of aviation growth in Canada over extended periods. Over the last 10 Year and 20 Year periods, air traffic growth nationally has been particularly robust. Applying these national growth trends to the Greater Toronto and Hamilton region (GTHA), assuming the trendlines continue, points to a possible local air traffic recovery consistent with IATA’s latest forecast.
Supporting this possibility or even pointing to a faster recovery is the fact that Toronto Pearson (the 96+% contributor to passenger traffic in the region) has demonstrated recent growth substantially higher than the national performance.
What are external aviation agencies and stakeholders are saying about recovery in North America? The messages for North America are mixed. Toronto Pearson International Airport’s 2017 Master Plan is based on 3.7% Compound Annual Growth Rate (CAGR) and this is reflected in the following graph.
In December 2019, IATA forecasted a 3.8% CAGR for the subsequent 20-year period. Its latest prediction is just 2.2% CAGR for North America, a full 42% drop in growth rate. Similarly, Boeing has dropped its 20-year forecast for North America from 3.1% CAGR to 2.7% CAGR.
On the optimistic side, we have the International Civil Aviation Organization (ICAO) raising its forecast for North America to 4.1% CAGR from 3.1% CAGR (2016), and the Federal Aviation Authority (FAA) increasing its forecast for the USA-Only to 2.4% CAGR from 2.2% CAGR.
What’s happens next?
Forecasting air traffic growth in North America and regionally is very volatile and subject to rapid and significant change at this time. Forecasts need to be monitored closely over the next year or so. The Q3/Q4 2021 results for the GTAH should be very revealing in terms of air traffic recovery.
The likely scenario is that the forecast of global commercial passenger recovery by year-end 2023 plays out in the Toronto region as well. This optimism is reinforced by another major factor, population and economic growth.
The Toronto region is the fastest-growing region in Canada and possibly North America. The Greater Toronto and Hamilton Area currently has a population of approximately 7 million people. The Province of Ontario’s growth plan, “A Place to Grow: Growth Plan for the Greater Golden Horseshoe”, forecasts that this area will grow to 9 million people by 2031, to just over 10 million by 2041, to more than 11 million by 2051. That’s a 60 percent population growth in 30 years!
With that growth comes jobs and increased economic activity, collectively increasing the demand for aviation services (passenger and cargo) in the region.
In the immediate future, federal and local actions are required.
International borders must be opened to air travel. Canadian air traffic volumes and growth will not return until people are confident that travel to this and other countries is safe / COVID risk-free. Fully two-thirds of Canadian air traffic is to and from other countries (Transborder and International).
But Australia has stated that they are not opening their borders to air travel until 2022. The messages from the European Union are particularly clear. No one will be getting in unless you can prove you are vaccinated. Our federal government keeps pushing the Borders Open date back.
For air traffic recovery in Canada:
- All Canadians need to get vaccinated. Get your shots! Herd immunity must be achieved.
- Vaccine Passports will become a reality. Some Canadians don’t like this idea and may decide to stay home instead.
Air traffic forecasts for North America and globally are very fluid at the moment and are expected to continue as such for the next few years. I’ll be watching and adjusting my analyses accordingly.