top of page

A Not-Quite-End-of-Year Review

It isn’t quite the end of the year, and as we’ve seen from recent events, a lot can change in a month. But I think it’s a good moment to look back on 2021 and reflect on how things have gone for the airline business, and how that compared to expectations. Specifically, I’m going to look at how things have turned out in comparison to what I thought this time last year, which I set out in a post titled airline industry predictions for 2021.

Vaccinations and the timing of recovery

My first prediction was all about the pace at which vaccination programmes would roll out and what that meant for the timing of the recovery.

I said that vaccine supply would be a bigger constraint than logistics, and that governments would remain in “lock-down” mode until high-risk people had been vaccinated, which I expected to take until at least the end of March. I predicted that by April, that milestone would have been reached and with 50% of the population forecast to have been vaccinated, case levels should be well down as immunity levels rose in the population.

That prediction was pretty spot on for the UK, where 50% of the population had received at least one dose by April 29th. But the big thing I didn’t predict was the rise of the variants. When I published my “predictions for 2021” post on December 18th, the first such “variant of concern” had still not been revealed to the world. News of what became known as the Alpha variant broke just four days later on December 22. That led to a much more restrictive set of lock-downs in the UK over Christmas that stretched well into the first quarter of 2021. Q1 was pretty much a write-off for travel, with the UK actually going as far as making it illegal for UK citizens to travel overseas in most cases.

Travel did restart in May, but restrictions were relaxed only very gradually and with frequent “stop start” changes in policy that seemed almost designed to maximise uncertainty for travellers. Just as travel was beginning to be slowly reopened, we got the Delta variant, which arrived in the UK in late April and led to another rise in cases and a further clamp down on overseas travel.

A genuine relaxation of most travel restrictions from the UK took until the final quarter of the year, at least six months later than predicted, and crucially wiping out the all-important summer season for a second year in a row. The EU started to relax restrictions earlier than in the UK, so EU airlines had a somewhat better Q3, with a couple even managing to report a small profit. When the US finally reopened its border for European travellers at the start of November, things seemed finally to be looking up.

When I started writing this post, Omicron had still not made its unwelcome appearance. This section would have ended here, with the conclusion that whilst recovery in Europe had been delayed by about six months, it was finally happening and we could at least end 2021 on a more positive note. Now that is not so clear. Whilst it would be premature to conclude that the recovery has once again been snuffed out by another variant, we'll have to see what the next few days bring. That starts with the science - working out how bad Omicron really is. But it will be the government responses that will tell us how much of an impact it will have on the recovery. We’ve already seen governments taking a precautionary response, with the reimposition of quarantine requirements, flight bans and border closures. But the big unanswered questions relate to how long these will last. Will they be temporary, and quickly reversed? Or will they be long-lasting, or even escalate further? Hopefully we'll have more clarity on those questions by the time I publish my predictions for 2022.

Returning to our review of 2021, the market recovery in the rest of the world had similarities to what we’ve seen in Europe, but there have been some differences. The US airlines did see a solid recovery in 2021, at least for their domestic operations, which make up a huge part of their business. As you can see from the following chart from IATA, the international passenger traffic flows which performed "less badly" were also all connected to North America, namely travel to Central/South America and to the Middle East. Outside of the big domestic markets like China, Asia was a bit of a disaster area, with travel restrictions some of the most stringent in the world. Cargo continued to be the bright spot, with generally decent volumes combining with still inflated yields due to the lack of passenger wide-body belly capacity.

Testing, testing

My second prediction related to the industry’s hopes that testing could allow travel to restart without waiting for vaccination programmes to be completed. I said that I didn’t expect testing to make much difference to the timeline for restarting travel, which would be driven by vaccination progress.

I was correct that testing wouldn’t accelerate the restart, but failed to consider the potential for testing to delay it, at least in the UK. The UK came up with such a draconian and expensive set of testing requirements that even when travel was allowed to resume, the testing regime was a massive drag on travel volumes. That only really started to change in the middle of the year, when fully vaccinated people started to be exempted from the most onerous testing requirements. And now some of the testing requirements have been tightened again in response to Omicron.

Vaccination passports

My third prediction was that vaccination wouldn’t become mandatory for travel, but that unvaccinated travellers would be subjected to testing and quarantine requirements that wouldn’t apply to vaccinated people. I think that matches well with what has happened in the vast majority of countries.

Great deals for passengers

I thought there would be some great deals available as the industry started bringing back significant amounts of capacity. The ongoing travel restrictions have meant that capacity didn’t really return in 2021 and the deals have therefore not been available either. Maybe we’ll see both in 2022, Omicron, Pi, Rho and Sigma permitting.


I said that I expected more retrenchment and restructuring, but didn’t expect much in the way of “full exits”, where airlines simply ceased to exist. Despite the much worse 2021 than anyone was expecting, this is a prediction that has held up well. That’s thanks to strong availability of credit from both governments and from the private markets. Central banks have responded to the ongoing crisis by flooding the financial markets with liquidity. Whether airlines will be in a position to repay all the debt they have taken on is another question, of course.

To be honest, I'm surprised we didn't see more bankruptcies, given the delayed recovery. Even airlines that had already gone bust managed to re-emerge, although as significantly smaller entities. ITA, Italy's new flag carrier, has less than half the capacity of its predecessor Alitalia. The same is true of Norwegian. Even Flybe is promising to come back again in "early 2022", although with only 200 direct jobs being planned, compared to the 2,000 it employed before its demise. It looks to me more like a paper airline designed to realise value from the old airline's slots.


Much as the industry needs further consolidation, I correctly predicted that we wouldn’t see much if any in 2021, since would-be buyers would be constrained in both their financial capacity and their management bandwidth. For those who got government assistance, that usually also came with restrictions on what the money could be used for.

Which airlines would be winners in 2021?

I said that Ryanair and Wizz would be well placed in Europe, but since that was already widely anticipated by the stock market, I was less convinced that their shares represented a good investment. I also thought IAG might do relatively well, due to the head start on the vaccination programmes in the UK and the US, compared to the EU.

I was correct that these three would perform better than my "non-picks", Lufthansa, Air France-KLM and easyJet. But even before Friday's Omicron hit to airline share prices, all six of these airlines had seen their share prices fall since I made my predictions last year. Not surprising perhaps, given how badly 2021 turned out compared to expectations.

Air France - KLM is the one airline that has done better than I expected, at least in relative terms. Its share price hadn't fallen as much as easyJet and Lufthansa Group before the Omicron drop, and that news had less of an impact on them than it did on the others. That’s somewhat surprising to me, given Air France’s dependency on profits from its African routes.

I didn't make predictions for the US airlines, but despite the recovery in the US domestic market, the share prices of the big three have also mostly fallen since last year. Delta is down 11% and United is down 6%. American Airlines managed an increase in its share price of 7.5%. I haven't done a comprehensive review of all the worlds' quoted airlines, but the only airline I can find that did better than that was Mexico's ultra-low-cost carrier Volaris, who managed a 30% increase.

Other reflections on 2021

That's it as far as my predictions for 2021 go. Pretty reasonable overall, with the big and important exception that I was too optimistic about the timing of the recovery, linked to a string of new virus variants, the first of which hadn't even appeared this time last year.

For the airline business, 2021 has been another awful year, although of course there are a few exceptions. A big domestic market, a strong mix of cargo and an ultra-low-cost business model were all features which helped airlines to outperform in 2021.

Can we look forward more optimistically to 2022?

That's a question for another post...


Robert Boyle held a series of senior executive positions at British Airways and International Airlines Group over a 26-year career in aviation, including Commercial Director at British Airways and Director of Strategy at International Airlines Group.

He started his career at strategy consulting firm LEK Consulting and since leaving IAG in 2019 has been working as an independent consultant.


bottom of page