Total domestic traffic remained below 2019 levels in March but was significantly improved from February, data from IATA shows. Overall domestic traffic across regions, as measured in revenue passenger-kilometres, was down by 32% in March 2021 versus March 2019, compared with February's 51% decline. "The positive momentum we saw in some key domestic markets in March is an indication of the strong recovery we are anticipating in international markets as travel restrictions are lifted," IATA’s director general Willie Walsh states. "People want and need to fly. And we can be optimistic that they will do so when restrictions are removed." IATA notes that all markets except Brazil and India showed improvement in domestic traffic compared to February 2021, with China being the key contributor. Brazil reported a 54% decline in March compared to March 2019, as authorities tightened restrictions amid rising Covid-19 cases. India's declined by 32% versus two years ago, while China reported a 2.6% decline. Japan and Australia, which in the Asia-Pacific region are key domestic markets, saw March domestic traffic decline by 58% and 46% versus two years ago, respectively. The USA posted a 44% decline over the same period. Meanwhile, international traffic remained in the doldrums, declining by 88% in March versus March 2019 due to travel restrictions and marginally improved from February's 89% decline, IATA says. Airlines in the Asia-Pacific region recorded the greatest decline in international traffic in March, down by 95% versus March 2019 as the region continued to suffer from the steepest traffic declines for a ninth consecutive month. Capacity, as measured in available seat-kilometres, was cut by 87% and the load factor fell about 49 percentage points to just under 32%. European carriers were close behind, with an 88% decline in versus March 2019, slightly improved from February's 89% decline. Capacity was cut by 80% and load factor fell by 35 percentage points to 49%. For Middle Eastern airlines, international traffic fell by nearly 82% in March compared to March 2019, versus an 83% decline in February. Capacity fell by 67% and load factor declined 32 percentage points to 41%. North American carriers saw international traffic fall nearly 81% compared to two years ago. Capacity was cut by nearly 63%, while load factor dropped 41 percentage points to 43%. The data also shows an 82% decline in international traffic for Latin American airlines, in March versus the same month two years ago, compared with February's 84% decline. Capacity was cut by 77% compared with March 2019 and load factor dipped 18 percentage points to 64%, making it the best performer across regions for a sixth straight month. In Africa, airlines’ international traffic fell by 74% while capacity contracted by 62% and load factor fell 22 percentage points to 49%. Globally, overall traffic fell by 67% in March versus March 2019, compared with February's 75% decline.

Hong Kong's government is considering shortening the mandatory on-arrival quarantine requirement from 21 days to seven days for those fully vaccinated, although the benefit to the city's struggling airlines may be limited. "While the efforts of the Hong Kong government to lower the mandatory on-arrival quarantine period for fully vaccinated travelers from 21 days to seven days will be welcomed by many airlines and travellers, there would not be a drastic increase in demand for air travel even with the shortened period," says Eric Tamang, a Hong Kong-based valuations analyst. "Quarantine adds extra cost and time for travellers, hindering them from travelling to and from another country."
Government adviser Ivan Hung Fan-ngai has proposed that travellers fully vaccinated against Covid-19 could, in addition to having their quarantine reduced to seven days when they arrive in Hong Kong, be allowed to serve their quarantine at home rather than in a hotel, according to a 5 May article in local newspaper The Standard. Currently, travellers arriving in Hong Kong must serve quarantine in hotels at their own expense for between 14 and 21 days. In addition, non-Hong Kong residents who have visited places other than mainland China, Macau, Taiwan, Australia, New Zealand or Singapore within 14 days of arrival will be denied entry to the city, according to a 12 April notice on Hong Kong International airport's website. Even if the government decides to implement a reduced quarantine for vaccinated travellers, the number of fully vaccinated people in Hong Kong is low. Only 7.6% of Hong Kong's population is fully vaccinated against Covid-19, according to government data published by The South China Morning Post. Vaccine hesitancy, rather than lack of supply, is one of the main reasons for the low vaccination rate. "Given the relatively low uptake of vaccination in Hong Kong and unstable daily Covid-19 cases abroad, the general population would still be reluctant to travel due to uncertainty and quarantine measures abroad, which can affect airline load factors and hinder airline revenues," Ascend by Cirium's Tamang notes. Local airlines Cathay Pacific, HK Express and Hong Kong Airlines were not immediately available for comment. Cathay Pacific has posted a 96% year-on-year decline in group traffic for March. It carried a total of 18,539 passengers, a 94% decline. Dennis Lau, a senior valuations analyst at Ascend by Cirium in Hong Kong, adds that the reduced quarantine would mainly be attractive to travellers like Hong Kong students returning from study overseas, or those visiting family, who plan to have a longer stay than the typical tourist or businessperson. "However, business travel and leisure travel are unlikely to see any notable increase, even with the shorter quarantine," he says. ne glimmer of hope for on-arrival-quarantine-free travel to Hong Kong is now flickering. The long-delayed Air Travel Bubble (ATB) between the city and Singapore is set to launch on 26 May, but a Singapore government official has said it is assessing any potential changes given a recent outbreak of Covid-19 in Singapore. The ATB has a strict suspension mechanism whereby flights must be paused for two weeks if the weekly average number of unlinked Covid-19 cases in either city rises above a certain level.

British Airways is downsizing a recent enhanced equipment trust certificate (EETC) issuance by almost 40% as a result of production delays reducing the available aircraft to form its collateral. Fitch Ratings states in a 28 April note that the IAG-owned airline is reducing the size of its EETC 2020-1 issuance from $1.04 billion to $614 million. This will involve the downsizing of its Class A certificates from $763.5 million to $466.6 million and Class B certificates from $241.1 million to $147.4 due to production delays by aircraft manufacturers beyond the certificates' drawdown deadline of 31 March 2021. One Airbus A320neo and three Boeing 787-10s will no longer be financed by the certificates and undrawn certificates proceeds held at the depositary have been refunded back to the certificate holders. BA expects to find other sources of funding to finance delayed deliveries, Fitch states. BA issued its EETC 2020-1 in November 2020, secured by 14 aircraft, in order to repay a $750 million bridge loan and fund additional deliveries. The collateral consisted of four A320s delivered in 2009-10 and the rest would be new A320neo, A350-1000 and B787-10 deliveries in 2020. Fitch says the collateral pool's two A350-1000s – which it views as tier-two assets due to their limited user base and orderbook and the absence of engine commonality with other A350 families – will now contribute over 40% of the total from 25% initially. The older-generation of A320s will now contribute 9% compared with 5% initially; the A320neo and 787-10 now contribute 12% and 38%, respectively. The downsizing does not impact on Fitch's "BB" rating with a negative outlook for the B Class certificates and the "A-" rating for the Class A certificates. The liquidity facility associated with the financing and the strong ratings of the UK carrier factor into the agency's calculations for the Class B certificates.