The airline industry provides an important worldwide transportation network which makes it essential for global business and tourism. It also plays a significant role in facilitating economic growth, particularly in developing countries. The airline industry transports close to 2 billion passengers annually and 40% of interregional exports of goods by value.
Air transport is a highly efficient user of resources and infrastructure. It has high occupancy rates of 65 to 70%, which is more than double those of road and rail transportation. The airline industry is a major employer. It generates roughly about 29 million jobs globally.
It generates 5 million direct jobs and 2.7 million indirect jobs through purchases of goods and services from companies in its supply chain.
The collapse of airlines due to covid
Air travel has been one of the hardest-hit industries due to the covid-19 pandemic.
As soon as the news of the virus became widespread in late January, travel demand to Asia from the rest of the world plummeted [1]. A lot of countries around the world closed their borders. Even in countries where there wasn’t a travel ban, passengers avoided air travel due to coronavirus-related anxieties. This led to lower demand for the airlines.
Some major airline carriers were fortunate enough to get strong government support to stop them from going bankrupt[2]. But some airlines weren’t fortunate enough and collapsed due to bankruptcy.
Some of the airlines that collapsed during covid are as follows:
Flybe (UK): March 2020
Trans States Airlines (US): March 2020
Compass Airlines (US): March 2020
Virgin Australia (Australia): April 2020
Loss of jobs
According to industry figures released on 30 September 2020, the severe downturn in air traffic during 2020 caused by the COVID-19 pandemic, which was then followed by a slower than expected recovery, will result in a loss of up to 46 million jobs that are normally supported by aviation around the globe[3].
Analysis showed that up to 4.8 million jobs in aviation may be lost by the beginning of 2021, a 43 % reduction from pre-COVID-19 levels. When we expand those effects across all of the jobs that aviation would normally support, 46 million jobs are at risk. These include highly-skilled aviation roles, the wider tourism jobs impacted by the lack of air travel and employment throughout the supply chain in construction, catering supplies, professional services, and all the other things required to run a global transport system.
Emirates, a United Arab Emirates-based airline, cut about 30,000 jobs amid the virus outbreak. It initiated a second round of staff cuts terminating the employment for 30% of their entire workforce.
Etihad airlines also laid off its staff to curb the losses due to the COVID-19 pandemic[4].
It went ahead and terminated 600 pilots and 700 cabin crew, laid off hundreds of employees, and asked staff to take unpaid leave due to the pandemic.
Tourism industry taking a hit
Over 58% of all international tourists travel by air. Aviation and tourism industries depend on each other for sustainable growth.
Countries all over the world applied travel restrictions to limit the spread of coronavirus. This led to airport closures, suspension of incoming and outgoing flights, and nationwide lockdowns. Due to this international tourism went down by 65% in the first half of 2020[5].
Tourism is essential to economic development strategies in many developing countries, particularly in remote regions far away from their source tourism markets that rely on a steady inflow of tourists most through airways.
Without the influx of tourists, their economies would decline significantly. In some Caribbean countries, tourism provides one of the few means of economic growth. It was hit hard due to travel restrictions.
Fall of wide-body aircrafts
With the Covid-19 crisis likely to reform the make-up of airline fleets and passenger traffic down to as much as 90%, wide-body planes appear to be first in line for the chopping block[6].
A wide-body aircraft can make more money in good times
because it can carry more people. But they also can lose a lot more in weaker times like the present because of their high monthly ownership costs, fuel, and labor requirements. This has led to the grounding of many wide-body aircrafts
Lufthansa is now phasing out several wide-body planes from its fleet this year, including six of its A380s, seven A340-600s, and five B747-400s.
Virgin Atlantic also recently announced the immediate retirement of its fleet of 7 Boeing 747 aircraft.
Countries with no domestic flights
Some countries like Singapore, Hong Kong (SAR), Kuwait, United Arab Emirates, Belgium, The Netherlands lack domestic flight networks[7].
This is mainly due to the country’s size or due to the fantastic train network run by countries like The Netherlands and Belgium.
These kinds of countries are home to some of the best and most widely connected international airlines like Brussels Airlines, Kuwait Airlines, Singapore Airlines, K L M, Emirates, Cathay Pacific, and a lot more. COVID-19 pandemic turned out to be the worst nightmare for these airlines due to the suspension of transfer/transit traffic by other countries – something that these airlines greatly relied on. This further led these major airline carriers to cut off workforces to make ends meet for the airline.
Conclusion
The airline industry post covid isn’t going the be the same. Deep cleaned planes, limited seats, new check-in procedures, longer lines, and healthscreening have become the new normal. IATA chief predicts that air travel won’t return to pre-crisis level until 2023[8].
To tackle the losses major airlinesare rushing to convert passenger jets into freighters, as the value of used planes tumbles amid pandemics.
The boom in e-commerce is expected to help boost the trend. With less demand for air travel due to covid and limited number of seats available for booking due to social distancing in the aircraft, more airlines are shifting toward narrow-bodied aircraft to curb the losses.
While the pandemic did see the fall of some airlines. Governments around the world are stepping in to rescue airports and airlines by easing taxes and providing financial aid to the airlines to prevent their bankruptcy.
There is a lot of uncertainty around the industry at present.
Will the airline industry return back to normal?
Will the vaccination of passengers improve the present situation of airlines?
Or will a new wave or strain of the virus cause more disruption in the airline industry?
Only time will tell.
Article by
S L NITHYANANDA RAO
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