IATA “doesn’t have a clue” as airlines face scrap decisions

Ascent Aviation’s storage facility

IATA, The International Air Travel Association should be leading the way you would think, rather than simply reacting to the plight of airlines, it sits there producing figures and guidelines that become so outdated so fast its credibility is all but shot to bits.

Yet again, IATA, the airlines trade body, which should coming up with ways to helps, policies to follow and guidance, which is what most trade bodies do, as well as lobby on behalf of its members, issue yet another lowered Passenger Traffic estimate for 2020.

These estimates are used by airlines to convince themselves things will be brighter than they actually are. And that’s their biggest sin. Airlines look at the forecasts – extrapolations of worldwide and regional trends that delve into some notable detail, and use them with their own data to decide what to do next.

IATA hasn’t once this year come up with a forecast that actually said what would, in fact, happen.

The forecasting they have done for years is based on the obvious – big economic ups and downs, the strategic big picture overviews. With data and practice anyone can tell you that a financial downturn will see business travel drop, even estimate its percentage.

When the stock market is flying high, its not difficult to predict the business seats will sell and the airlines will do better and be more profitable, that more people will fly.

smaller aircraft are some of the most likely to be found in storage

What IATA’s modelling doesn’t take into account is people changing habits. Rather than adapt their models to see an obvious human response to not want to travel in a metal cylinder full of people who might be contaminated with a potentially deadly virus, or that digital services like Zoom, Skype and FaceTime might suddenly prove their worth like never before, IATA just watches the numbers fall, and revises them down, and down, because they’ve not once been accurate this year. Like much of the rest of the industry, they’ve had their blinkers on and their guidance has proven useless.

The effect on airlines is finally to stop looking at this data as guidance, and merely as the finger in the wind that it is. Only slowly, after six months are they really starting to see what’s happened and how long things are going to take to recover.

Delta ditched its entire 772 fleet

And not before time. For many airlines the vast acres of aircraft parking are now pretty much maxed out. Roswell International Air Centre reported a staggering 486 stored aircraft on September 30th, 330 of them sent in since March. The facility has had to hire 200 new staff to carry out maintenance on the aircraft.

They, and this applies to dozens of facilities world wide, are now waiting on airlines and leasing companies to tell them what to do with the aircraft. The 757’s if they’re in the right age group and low cycles, are likely to end up as cargo conversions. 772’s may be stored for longer, but not much. The older 767, A330, 737, A319/20’s are almost certainly going to be broken up. And they’re a lot of aircraft. Estimates range from around a third to half of everything in storage will end up as scrap.

At Arizona’s Pinal Air Park, they’ve been flooded with aircraft coming off leases. Much of these have actually been the smaller A318/19, Embraer and CRJ’s. On top of that old 767’s and 757’s have topped the list.

Around two thirds of the smaller aircraft will go into long term 1+ years storage, some are far too young to be broken up. Others like 737NG’s and 767’s are almost all for the breakers.

Similar stories are heard all over the world. British Airways has been flying its 744s out of Heathrow every couple of weeks, or from their short term storage at places like Bournemouth. Their last flights are the breakers, which just don’t have the space for so many aircraft in rural England or southern Wales. Breakers in the Netherlands, UK, and Spain are working flat out crushing aircraft to meet demands they never ever expected to see.

Air Asia Japan closed for good yesterday

And meanwhile, around the world, airlines like Air Asia Japan simply stop flying, permanently. Malaysia Airlines is undergoing yet another fiscal disaster restructure, but its happened so many times now, it goes almost unnoticed.

And still nobody knows when it will end. Because it never will, that’s not how these things work. They peter out, they change. One of the reasons the mid 1920’s turned into such a hedonistic, almost impossible boom time, was the restrictive and depriving nature of World War One from 194-18, piled on top of that came the influenza pandemic of 1918-1921 that killed some 50 million people and a major recession caused by that and the end of wartime production.

This time we face a major pandemic, a major recession and restrictions. Once the pandemic is under control, expect humanity to express itself once again, and for air travel to be a major part of that need to break out of the restrictions of the recent past. It doesn’t take big data to tell you human nature is generally rebellious.