The aviation industry is inarguably one of the worst-hit sectors by the covid 19 pandemic. Movement restrictions and containment rules put in place by governments worldwide have dealt a big blow to the entire industry’s activities, from airport operations to air travel. The covid 19 pandemic was an unexpected crisis that saw airports closed down, flights canceled, thousands of airline operators and employees sent home, and the world’s fleet of airplanes grounded.
In the meantime, many airlines have gone bankrupt while others are appealing to governments for possible bailouts. An unprecedented decline in demand has brought substantial liquidity problems and financial problems for many carriers forcing many operators to cancel and suspend flights and services. The aviation industry needs support from governments, emergency financial help, loan guarantees, and possibly waivers from the local regulators to prevent a possible collapse. Many sources, such as Karl Scranz say that the covid 19 pandemic will have a long-term effect on the aviation industry, possibly a generation or more.
Table of Contents
Covid 19 Impacts On the Airline Sector
Some of the airlines already in dire plights before the pandemic were largely affected by the pandemic. Movement restrictions and international border closures disrupted the entire overflow of travelers. With the new regulations to maintain a low level of air cargo activity and operate repatriation flights only, airlines have been forced to ground their fleets and reduce their capacity to 90%. That is in addition to implementing emergency measures and reducing costs.
Following that, many airlines have found themselves unable to operate and honor their financial deadlines hence declaring themselves bankrupt. For instance:
- The largest airline in Latin America, Latam, with 41000 employees, declared its bankruptcy in May 2020.
- At the end of April 2020, Virgin Australia declared that it would discontinue its financial payments.
- Aeromexico of Latin America also filed for bankruptcy in late June 2020.
That means one of the above four airlines is more likely to disappear in the future and many others worldwide. Many unknown carriers are now at the mercy of regulatory authorities.
Canceled Flights
According to the International Air Transport Association, more than four million flights were canceled during the containment period. Chinese airlines suspended their flights during the pandemic and other worst-hit airlines, including the British Airways Emirates, American Airlines, Qatar Airways, Singapore Airlines, and Air France.
Job Cuts
Airlines have been forced to significantly minimize their workforce to lower operation costs amidst the pandemic. As a result, 25million jobs in the aviation sector ranging from airlines, airports, manufacturers, subcontractors, engineers, and other stakeholders in the aviation industries face a big threat. For instance, British Airways plans to cut 12,000 jobs or possibly a third of its entire workforce.
Has the Coronavirus Killed Aviation for a Generation or More?
Aviation experts believe that the covid 19 pandemic has changed the aviation industry in the long term. However, it has not entirely killed the industry for a generation as there is still hope. The aviation industry is entering into a period of navigating and balancing the new recovery process, which requires more strategic management than before.
Following the pandemic, there is a need for stakeholders in the aviation sector to adapt to their clients’ changing needs. Integrating insurance programs and leveraging data to maximize risk transfer efficiencies are viable options to implement responsive protection and cost efficiencies.