Home anti consumer 5 ways Covid-19 will challenge airlines for years to come (opinion)

5 ways Covid-19 will challenge airlines for years to come (opinion)

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Even more than the attacks of September 11 or the financial crisis of 2008-2009, the Covid-19 deeply disrupts the aviation industry. Most scars will be permanent and visible. Based on our most recent analysis, the aviation industry is unlikely to return to pre-Covid levels until the second half of 2022 at the earliest – and even then it will only be for travel. interiors.

The long-term scenarios we modeled are based on a combination of forecasts from our Covid-19 Pandemic Navigator, various econometric models and real-time data on industry passengers. We also generate six-month regional projections using the International Air Transport Association’s browser and industry data. Our recovery forecast, which includes a second wave of coronavirus outbreaks, assumes the development and release of a vaccine by mid-2021.

Between bankruptcies and consolidation, there will certainly be fewer airlines in the world by 2023. And those that survive will operate simpler networks, almost exclusively built around connections through their larger hubs and markets.

Cheaper flights, but fewer options

For consumers, the shrinking industry is likely to result in fewer non-stop flights and fewer flight choices from small towns. Initially, carriers may reduce fares to increase demand, but the effectiveness of this strategy will be limited by economic uncertainty and high levels of unemployment in many countries. The discounts will likely only last until the industry begins to see a sustained rebound in demand, which will depend on the virus and the development of a vaccine.

More and more airline workers will lose their jobs

If Congress fails to come up with another bailout for the airlines by Oct. 1, the United States could see as many as 225,000 more airline workers lose their jobs this fall, according to our analysis. On this day, airlines can start laying off workers, which they previously couldn’t do in exchange for agreeing to federal aid. These job losses would represent about 30% of the total US airline workforce, according to our analysis, and would include layoffs, paid and unpaid time off, and early retirements. These predicted losses would be in addition to tens of thousands more in the global industry.

But if airlines are to cut payrolls to cut costs, they also need to retain the right employees to facilitate growth once the industry rebounds.

Pilots and technicians are clear examples of the airline conundrum. Before the pandemic, the industry faced gaps in both categories, and today’s early and mandatory retirements will reduce the numbers even further. Considering the time it takes to train pilots or technicians and the likelihood that new candidates will be discouraged by the current unattractive job prospects, it is easy to imagine shortages in one or both positions as early as 2024. Of course, that will only be after the pandemic calms down and the industry begins to show real growth beyond 2019 levels.

No full recovery for business trips

One of the factors holding back demand is the anticipated contraction in business travel. We expect it to remain at least 25% below pre-pandemic levels for the foreseeable future, at least until 2021, as companies reduce travel between their own offices and facilities, due to instead relying on videoconferencing. These internal trips, which also include leadership and professional development meetings, account for around 40% of the company’s total demand, according to our analysis. We anticipate a return in external business travel, but at a slower pace than domestic leisure travel.

International travel will remain sluggish

Another area that is not expected to fully recover over the next three years is international travel, in part based on the number of travel restrictions put in place to prevent Covid-19 from crossing borders. For example, Americans cannot travel to many countries today due to concerns over the growing number of coronavirus cases in the United States.

The attitude of travelers will also have an impact. Oliver Wyman led a Traveler sentiment survey of nearly 4,600 consumers in nine countries who showed that the majority – around 58% – only planned domestic travel after the disappearance of Covid-19. Another 6% do not intend to travel at all. In China, normally the largest outbound tourism market in the world, only 12% of those polled said they would consider traveling abroad after Covid.

More than half also said the coronavirus will change the way they travel and their choice of destinations for the foreseeable future, favoring places based on safety and hygiene. International travel, which will likely depend more on vaccine development, is not expected to return to 2019 levels until well into 2023.

We predict that only China, South Korea, Italy, Norway, New Zealand and Greece will be able to reach 75% of domestic travel demand in 2019. These countries are among those that have been able to contain the virus and are experiencing a return of reservations. The recovery in the rest of the world will be significantly slower – the United States, for example, is expected to account for only 40% of 2019 demand by the end of 2020.

While the industry’s near-term outlook is bleak, the industry’s forecast contraction – similar to that following the last major recession – is expected to help fuel another period of growth and profitability in the second half of the year. the decade for surviving airlines.

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