While many of us are already trying to imagine what air travel might look like following the COVID-19 global pandemic crisis, CAPA – the Centre for Aviation – has confirmed its analysis of the impact on the aviation sector, saying that there is ‘no more normal’.
CAPA says the crisis facing aviation is greater than any previous crisis and, indeed, has “the dimensions of a world war.” With a recession looming in 2020/21, CAPA says recovery will take longer and will not usher in a return to ‘normal’, citing several key factors that make this situation so different and ‘normal’ impossible.
This looked like something we knew before, but …
CAPA says previous crises that have negatively affected air travel and the aviation sector, including 9/11 and SARS, from which the industry ‘snapped back’, falsely led people to believe that COVID-19, originally contained within China, would play out the same way. However, with virtually ‘the entire world’ experiencing travel restrictions and populations in self-isolation and lockdown in their homes, it became apparent that COVID-19 was not a situation that would be resolved in a matter of months.
The revenue hit to airlines is vastly greater than in previous crises
Economists at IATA, the airline trade body, published estimations of the revenue hit to the world airline industry in February 2020. The revenue impact this year was estimated at USD$39 billion, or 3% of its original forecast of world airline revenue in 2020.
Only a month later, IATA’s estimate had risen to USD$252 billion – 30% of 2020 forecast revenue.
A global recession is coming in 2020/21
By comparison with previous crises, CAPA says the world economy is already suffering far deeper and for much longer than previously expected.
Airlines with insufficient access to liquidity will struggle to survive in a global recession.
Technology and ‘re-learning’ how to do business will have enduring impacts on air travel
As more people are forced to work from home and adapt business practices to the new way of living and working, and in the absence of travel options and face-to-face meetings, technology is providing unique and effective ways in which business is transacted. CAPA says technology is fast becoming a realistic substitute for air travel for some businesses. The longer people transact via technology, the greater the take-up of those technologies. In fact, the real potential exists for more technologies to be innovated and adapted to meet growing business needs and, despite the technologies having existed for some time, the COVID-19 crisis has created a necessity which already shows signs of ubiquitous use of those technologies.
Loss of confidence
CAPA says demand for leisure travel is unlikely to ‘snap right back’ to previous levels, or levels seen following other crises. CAPA says it is expected that there will be a residual unease about venturing far from home; fear of catching illnesses; fear regarding air filtering and general cleanliness in aircraft and, a lingering mistrust of being in close proximity to other people, particularly strangers.
Environmental campaigns against aviation may gain momentum
CAPA says aviation will face HUGE post-COVID-19 challenges, that aviation will need to redouble its efforts to rebuild and that overcoming ‘the shock’ will be a formidable task – far greater than previous demand shocks.
