THE LATEST NEWS COMING FROM the US.airline industry is extremely en- couraging. American Airlines expects to be at 80% of pre-pandemic capacity in the second quarter, Southwest Airlines believes it will reach 2019 levels in June (see page 24), and as Avelo Airlines CEO Andrew Levy puts it, the summer should see leisure demand "on steroids" (see page 25). COVID-19 vaccinations are progressing well in the U.S., and restrictions on daily life are slowly being rolled back. People are traveling once again. Whether the expected summer boom will be sustained into the fall and beyond is a question for another time. What is happening in the U.S. does not change the overall reality of the air transport industry, which is still bleak. In many ways, the U.S. is the exception: It is far more advanced in its vaccination campaign than most of Europe and is light years ahead of the developing world. U.S. carriers also have the huge advantage of a massive domestic market with no travel restrictions; the rough equivalent exists in only one other country-China. Large airlines such as Singapore Airlines, Emirates or Qatar Airways do not even have domestic flights, and most other carriers in Asia as well as in Europe have very limited domestic networks and must rely heavily on the reopening of international routes. It is therefore no surprise that the International Air Transport Association (IATA) now predicts higher industry losses for 2021 than it had at the end of last year. Airlines are expected to lose a combined $47-48 billion this year, about $10 billion more than the industry group anticipated four months ago. Air traffic will not return to 51% of demand for the full year but will stay at only 43%, below the positive cash flow threshold for many airlines.
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