The latest curved ball to hit aviation recovery is the recovery of oil and jet fuel prices to pre-pandemic levels.
This was highlighted in the latest Iata Financial Monitor (December 2020 to January 2021) released this week.
The report said oil-supply-cut extensions from OPEC+, and expectations about global economic recovery had led the price rally, despite the global lockdowns.
Airlines will face cost pressures once the recovery starts, as fuel is the largest variable cost and fuel hedging is limited at present.
Key findings from the report revealed that globally, air travel was expected to gradually revive in the second half of 2021, following a weak H1. This will mean that airlines will continue to focus on limiting losses by implementing cost-cutting measures and preserving cash balances.
Looking ahead, there are uncertainties regarding vaccination progress and the lifting of travel restrictions. Therefore, the strength of the rebound in travel demand will depend on the pace of vaccine roll-outs and easing of travel restrictions.
