Impact of Coronavirus on the Airline Industry in 2020


Impact of Coronavirus on the Airline Industry in 2020

The Coronavirus has disrupted various economic, political, and social activities around the world. Countries affected by the epidemic have resorted to banning social gatherings, closed down most institutions, and put in place various measures to curb the spread of COVID 19. This highly contagious disease has led to significant changes in the airline industry, with most companies enacting policies to protect workers and travelers. 

Airlines Halted by Government Directives

Most governments have issued directives to ban all flights from countries affected by the virus. Consequently, most airlines canceled and limited the number of trips (Bilotkach, 2020). Some governments have stepped in to save their airlines from complete collapse. The Hong Kong government, for example, plans to purchase 500,00 tickets from four airlines based in the city and give them away to citizens in a future epidemic recovery campaign (Mulfati, 2020). In this regard, the Italian government also nationalized Alitalia (a previously private-owned airline) to shield it from bankruptcy amidst the COVID 19 crisis. 

The concentration of infection cases in some cities has significantly lowered the demand for air transport services. This reduction in demand has forced some airports like Newark Liberty International, John F. Kennedy International, and LaGuardia to reduce their working hours (Mulfati, 2020). Other airlines like JetBlue and United airlines have reduced their plane capacities to maintain a safe distance between the passengers.  

Due to the financial crisis, most airlines suspended their refunds while others slowed down the process. Some airports have experienced complete paralysis of activities, especially in counties with high numbers of Coronavirus infections. The Wuhan Tianhe International Airport remained closed for almost two and a half months after the government put the region on lockdown (Mulfati, 2020). Other airline companies resorted to using their passenger planes to transport cargo to make up for lost income. 

Economic Uncertainty Due to Coronavirus

This epidemic has also created substantial economic uncertainty leading to a considerable reduction in share investments. In a recent analysis, IATA reports that over 25 million people risk losing their jobs due to the industry’s immense losses (Berti, 2020). The report also predicts a $63 billion loss in the aviation industry if the virus stays within current markets associated with China (International Airport Review, 2020). Airlines in most parts of the world face the risk of going bankrupt in the next months. Most airlines have requested various financial institutions and the governments to issue them with financial aid and bailouts. In the US alone, different airlines submitted requests exceeding $60 billion (Ghosh, 2020). 

The largest bank in Singapore, DBS Group Holdings, provided Singapore Airlines with a $ 2.8 billion credit to finance its operation during the epidemic (Mulfati, 2020). Despite this airline cutting down on its capacity by 96%, the investors feel confident that the airline is in a position to recover the losses after the present crisis (Mulfati, 2020). However, over 250 organizations in 25 nations have criticized the government for issuing most airlines with financial aid instead of using this opportunity to embed environmental and social conditions (Mulfati, 2020).

In conclusion, the Coronavirus has led to a high reduction of air travel leading to significant losses and reduction of revenue in the airline industry. Many people have also lost their jobs or had their salaries cut down. However, most airlines will learn from this epidemic and put in place measures to ensure the industry does not crumble down during such crises.

References

Berti, A. (2020, March 31). How coronavirus will change aviation in the next decade. Airport Technology; Airport Technology. https://www.airport-technology.com/features/impacts-of-coronavirus-on-aviation/

Bilotkach, V. (2020, March 23). Coronavirus will affect the airline industry for years to come – but not all of it will be bad. The Independent. https://www.independent.co.uk/travel/news-and-advice/coronavirus-airline-industry-future-flights-covid-19-a9418971.html

Ghosh, I. (2020). This chart shows how airlines are being grounded by COVID-19. World Economic Forum. https://www.weforum.org/agenda/2020/03/this-chart-shows-how-airlines-are-being-grounded-by-covid-19/

Internationsl Airport Review. (2020). IATA publishes updated analysis of coronavirus impact on aviation industry. International Airport Review. https://www.internationalairportreview.com/news/113216/iata-updated-analysis-coronavirus-aviation/

Mulfati, J. (2020, February 28). Coronavirus News: Regular updates on COVID-19’s impact on the Airline Industry. APEX | Airline Passenger Experience. https://apex.aero/coronavirus


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Published on: 11 Apr 2020

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