Impact of COVID 19 on the Aviation Industry
Impact of COVID 19 on the Aviation Industry
From whence the World Health Organization reported the first case of COVID 19 on December 19 2019, the disease has adversely affected many livelihoods. Economies are crumbling internationally, and developed countries are struggling to stay afloat amidst the pandemic. The developing countries have been hit the worst, with their citizens’ livelihoods greatly affected by amassed debts to save their economies. The Airline industry has also felt the impact of COVID 19. From nose-diving stock prices to downgrade of airlines, the pandemic has negatively impacted the industry
COVID 19 is a respiratory disease that can be transferred from one person to another through close contact. Droplets with the virus from an infected person can spread from their nose and mouth when they sneeze, cough or even speak. Once the virus spread wide and far from China, governments sought to protect their citizens by imposing lockdowns and restricting movement only to essential service providers. Not only were cities locked down, but entire countries as well. Movements out of and into states were cut. With borders closed, air travels consecutively reduced. Air travel thus saw a rapid and significant plunge.
According to Dube et al. (2021), North American airlines, European airlines, Asian airlines and other global airlines experienced a decline in share prices, with Asian airlines being the first to feel the heat as the virus originated from China, Asia. As of May 2020, on average, global airlines had shed 49% of their market share value. The prolonged restrictions resulted in the bankruptcy of airlines. Severe cash burn also made airlines result to borrowing for survival. Even when some form of ‘normal’ eventually returns, airlines will resume with a backdrop of loans and more loans.
Aviation-supported jobs have fallen by 46 million to 41.7 million (IATA, 2021). Tourism relies heavily on air transport. With the airline industry paralyzed, so was the tourism sector as well. Cabin crew, engineers, and other workers at the airport got suspended from their jobs. Where the travel bans went on for months, some of them were eventually laid off to enable the aviation industry to cope. The grounding of airplanes made airlines struggle to find space for the aircraft to park. The airlines had to grapple with increasing parking fees and subsequent cash burn for those that got room.
Traffic restrictions and lockdowns caused losses to a tune of up to 371 billion dollars in 2020 globally. This situation may get worse due to increased daily infection rates and positivity rates constantly going high. Countries have tried to reemerge from the crisis caused by COVID 19, but it has proved to be a sinking sand situation. A second wave came up and made senseless the efforts that were to revive economies. Second lockdowns and restrictions were imposed. The globe was once again at square one. The airline industry was back to where it was in the beginning. The airline industry has to deal with carrying less capacity than usual. With fixed costs such as fuel prices, severe cash burn and revenue losses ensue.
In conclusion, individuals employed by the aviation industry have lost jobs. Others have had to endure pay cuts for months without a foreseeable end to it. Stock prices in airlines have declined. Airlines have incurred huge losses and accrued debts, to mention but a few. Seeing as there is no known cure for COVID 19 yet, hopes are squarely placed on the vaccines that have been developed to attempt to save livelihoods and economies. As the year progresses, we can only hope that things turn out for the best.
References
Dube, K., Nhamo, G., & Chikodzi, D. (2021). COVID-19 pandemic and prospects for recovery of the global aviation industry. Journal of Air Transport Management, 92, 102022. https://www.sciencedirect.com/science/article/pii/S0969699721000053
Economics (2021). The impact of COVID-19 on aviation. IATA. https://airlines.iata.org/news/the-impact-of-covid-19-on-aviation
International Civil aviation Organization (2020). Economic Impacts of COVID-19 on Civil Aviation. https://www.icao.int/sustainability/Pages/Economic-Impacts-of-COVID-19.aspx
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