Air travel may not recover as quickly as we would like, according to recent analysis shared by the International Air Transport Association (IATA), which outlines that the damage incurred by the COVID-19 global pandemic may extend to 2023. Long-haul travel in particular is likely to be the most significantly impacted.
In a report published by IATA, the organization anticipates that the recovery of the travel industry will be led by domestic endeavours to begin with, with passenger numbers not climbing back to their normal state until at least 2023.
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“Global GDP growth is expected to fall by around 5% this year, before rebounding and returning to its 2019 level in 2021,” the report explains. “To put this decline into context, it is around 4x larger than that of the global financial crisis, where world GDP fell by 1.3% in 2009.”
To place this in a travel-oriented context, the anticipated decrease in the volume of air passengers (measured by Revenue Passenger Kilometres – RPKs) is substantially more severe, with a decline of roughly 50% this year.
To simplify, an RPK is an airline industry measurement that determines the number of kilometres travelled by paying passengers.
“The recovery is such that a return to the level of 2019 does not occur until 2023, taking around two years longer than global GDP,” the report states.
It continues that there are several reasons why RPKs are likely to take longer to recover in the broader scope of the global economy. At the forefront, consumer confidence in air travel remains one of the most significant factors.
Given the nature of the coronavirus pandemic, it will likely take time for customers to feel comfortable travelling again, even as governments continue to lift border lockdowns and other health and safety measures.
As well, following a lockdown in the second quarter of the fiscal year, IATA anticipates domestic and short-haul air travel markets to begin recovery over the course of Q3. However, long-haul markets will take more time to recover.
“Domestic RPKs are expected to decline by around 40% this year, while international RPKs are likely to decline by around 60%,” the report explains. “As a consequence, we expect the average trip length will decline sharply this year, by around 8.5%, before gradually recovering thereafter.”
Of course, some variables may change, and there is undoubtedly a level of uncertainty surrounding the pandemic and the anticipated recovery metrics and predictions in terms of economic activity and the volume of passengers utilizing air transport.
“The impacts of the crisis on long-haul travel will be much more severe and of a longer duration than what is expected in domestic markets,” Alexandre de Juniac, director general and CEO of IATA, said in a press release.
“This makes globally agreed and implemented biosecurity standards for the travel process all the more critical. We have a small window to avoid the consequences of uncoordinated unilateral measures that marked the post-9.11 period. We must act fast.”
de Juniac continues that quarantine measures upon arrival in different countries will further facilitate distrust and shaky confidence that passengers feel regarding air travel. In a recent survey conducted by IATA, according to the press release, 69% of travellers disclosed that they would not consider travelling if it meant that they would have to quarantine for 14-days once they arrived.
“To protect aviation’s ability to be a catalyst for the economic recovery, we must not make that prognosis worse by making travel impracticable with quarantine measures,” de Juniac stated.
“We need a solution for safe travel that addresses two challenges. It must give passengers confidence to travel safely and without undue hassle. And it must give governments confidence that they are protected from importing the virus.”
According to de Juniac, IATA proposes a stacking of temporary non-quarantine protocols until a vaccine is developed as well as “immunity passports” or “nearly instant” coronavirus testing available at scale.
The organization believes that a universal “risk-based layered approach” will be crucial for the recovery and reopening of the air travel industry. Measures included in this approach would consist of preventing travel for those who present coronavirus-related symptoms by issuing temperature screenings and other procedures. It would also address the hazards surrounding asymptomatic travellers by having governments institute a “robust system of health declarations and vigorous contact tracing.”
Overall, IATA’s data shows that challenging times remain ahead for the travel industry with a multitude of factors at the industry as well as global governmental levels that will likely extend beyond this immediate crisis period.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
