Thank you, Tony. Thank you, Brian. And good afternoon everyone. So as Brian's presentation has shown you, once again, we are seeing a strong performance from cargo, which I think is very encouraging for a number of reasons. It clearly demonstrates the importance of air freight in the global supply chain, and the role that air freight has played in ensuring that that’s kept moving through this particular crisis, especially as we've talked about before, a lot of air freight, would normally travel in the belly hold of passenger aircraft.
So strong cargo performance and again we are witnessing clear evidence that demand for travel exists, as evidenced by the performance in the domestic markets. Brian's chart shows a strong performance in domestic markets in the US and China. I think there is every reason to be confident that those domestic markets will return to pre-crisis levels pretty soon. Airlines operating in markets where they have a strong domestic market, and that is particularly true of China, US, Russia, and I suppose, Australia, as well, it’s a big market with a limited number of players, those airlines will benefit from the performance of domestic markets.
But it also gives great encouragement to airlines operating in the international markets, where demand has once again been heavily suppressed by government restrictions. Once those restrictions are relaxed or removed, we will see a strong rebound. And that gives us the confidence that we expressed the last time we spoke, about the stronger performance in the second half of this year.
Also, it is worth noting that a number of countries, I think at this stage, 24 countries, have indicated that they are likely to open their borders, where customers can show evidence of vaccination. And we were pleased to see the recommendation coming from the EU Commission yesterday, which highlighted a new approach, a combination of approaches actually: one, where they talked about removing restrictions for people who can show evidence of vaccination, particularly those who have used vaccines authorized by the EU, but also made reference to the WHO emergency list. But secondly, talking about countries with a good epidemiological performance and they have changed the criteria from 25 per 100,000 in the 14-day average to 100 per 100,000 in the 14-day average. So it is a combination of both, and not just saying that you have to be vaccinated.
It is critical, actually, that we continue to make that point, that vaccination should not be the only key to reopening international travel. We believe that as the vaccine rolls-out, which is clearly having a strong impact on the suppression of transmission as evidenced by the scientific data that we’re seeing, that that should enable countries to remove some of the restrictions that they have in place. And we accept that testing will continue to have a role to play in the short to medium term. The important issue for us though, is the cost of testing. And I've got a couple of slides, just to show you some research that we have undertaken at IATA.
This is recent research from 16 different countries, of the cost of PCR testing. As you can see there is an incredible variation, both within country and across the 16 countries that we have looked at. Clearly this is unjustifiable. And we have talked about evidence of profiteering. I don't think you need to look further down this chart to see that there is clear evidence of this. Only one country--and I think credit to France--because France has implemented the WHO recommendation that the cost of testing should be borne by the country. That is a recommendation that governments have signed up to under WHO, but as you can see, that's not being implemented by those that we have looked at here, with the exception of France. And I think France and to a lesser degree the EU, is now leading the way, but when we look at the evidence here, it is clear to us that these costs will impact on demand.
If I just move to the next chart, we can see here based on some averages of ticket prices. So the average ticket price, in the pre-crisis, one way, was $200 US. Significantly, the average short haul flight, and we have defined for the time being as flights of up to 1,100 kilometers, that average was $105 US. So you can see from this that somebody traveling on a short haul flight where they are faced with the cost of PCR testing--and this is looking at the averages of the lower ends, $90 US per test--that the cost of the test is going to be very, very significant, and in many cases will be greater, indeed, in some cases significantly greater, than the cost of the ticket.
Then if you look at the impact that this would have on a family of four, the real risk here is that these prohibitive costs will prevent people, families from exercising their freedom to travel to visit friends, to take a holiday. And we cannot, as a society, we just cannot allow that situation to develop where only the rich can afford to travel again. The deregulation in the air transport market has been a fantastic benefit for consumers, not just for those who want to travel to see their family or to take a holiday, but also facilitating people who have to work in different countries from where they’re originally from, or indeed, people doing business.
We continue to highlight the excessive cost of PCR testing. We will continue to provide research to support our belief that much of this testing can be adequately replaced by lateral flow, antigen testing, which is just as effective from a risk management point of view, but significantly cheaper. And we also need to highlight the fact that governments continue to mandate these tests but are taking their big slice of the pie through VAT charges. As I said there is no evidence other than to demonstrate that people are being gouged by these high prices. We estimate that the actual cost of a PCR test is less than $15 US. We are still doing research into the actual costs, but I think there is clear evidence of very significant markups here.
So, we are pleased to see that the evidence in the domestic markets continues to support our belief that there will be a recovery in international travel. We are pleased to see that countries are now looking at opening their borders to people who have been vaccinated. We are pleased to see that the vaccination rollout, which is accelerating, is having an impact on transmissions, plenty of scientific evidence to support that statement. And we are optimistic that we will see a relaxation in the current restrictions, and that that relaxation will enable international travel to recommence and fulfill the strong demand that we believe exists once we get into the latter part of the second quarter of this year and moving into the second half of next year.
> Update on air cargo and air travel markets in March (pdf) from Brian Pearce, IATA's Chief Economist
> Press release: March Domestic Demand Sees Upsurge but International Travel Still Largely Shutdown
> Press release: Air Cargo Demand Reaches All Time High in March, up 4.4% vs Pre-COVID Levels