How Has Covid Affected The Airline Industry & How It Was Before The Pandemic

Nobody can debate over the fact that the world has permanently changed after the Covid-19 pandemic. In addition to the value of hygiene and cleanliness, it has made us realize many things that went unnoticed before.

The value of digitalization and the work from home scenario has become an aspect in our lives that may become permanent as well due to coronavirus.

However, this virus has spread worldwide without acknowledging borders. It has impacted all industries, all sectors and all aspects of our lives with devastating economic and financial losses and significant uncertainties.

One of the biggest industry that was impacted by the pandemic was the airline industry.

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Now, if you have at all travelled in an aeroplane since March 2020, you'd know how much more strict the airport security has become. From taking proper precautions to using the Covid app, the rules are intact at airports.

However, one can't deny that the aviation industry has gone into losses since the lockdown came into place last year. Worldwide, this impact has affected everyone in this industry and there is still no recovery as such when it comes to international travel. In fact, 2020 was deemed as ¡°the worst year in history for air travel demand.¡±

How was the Airline Industry affected internationally and in India?

The Airline Group of the International Federation of Operations Research (AGIFORS) held its 60th Annual Symposium in October 2020 on a virtual platform and talked about this very topic. The panels included representatives from Airbus, Boeing, the Massachusetts Institute of Technology (MIT), and 11 airlines from across the world: AeroM¨¦xico, Air Canada, Air France¨CKLM, American, Cathay Pacific, Copa, Emirates, IndiGo, United, Qatar, and SAS.

According to this report, they stated that the commercial aviation industry has supported more than 80 million jobs worldwide and has contributed up to 8% of the gross domestic product. More than 30% of all international trade by value is carried by air and approximately 60% of international tourists travel by air.

It read, " In 2020, we¡¯ve seen everything fall off a cliff. At the worst point in April, two-thirds of the world¡¯s fleet of aircraft was grounded, 90% of operations were not happening and even more so for international operations, where it was more like 98%. And we have the latest IATA [International Air Transport Association] estimation of where we will end up at the end of the year, which is around 60% down or 65% down on last year."

According to the International Air Transport Association (IATA), global passenger traffic as measured in revenue passenger kilometres declined by 65.9 per cent compared to 2019, as international passenger demand dropped 75.6 per cent and domestic demand fell 48.8 per cent below 2019 levels.

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About the year 2020 Alexandre de Juniac, IATA¡¯s Director General and CEO said, "Last year was a catastrophe. There is no other way to describe it. What recovery there was over the Northern hemisphere summer season stalled in autumn and the situation turned dramatically worse over the year-end holiday season, as more severe travel restrictions were imposed in the face of new outbreaks and new strains of COVID-19.¡±

In India, all scheduled international flights and domestic passenger flights in 2020 were suspended from March 23 and March 25, respectively. Scheduled domestic flights were restarted in a limited manner from May 25.

In fact, India's two largest airlines. IndiGo incurred net losses of ?2,884 crore and ?1,194 crore in Q1 and Q2 of this fiscal respectively. SpiceJet posted net losses of ?600 crores and ?112 crores in Q1 and Q2, respectively.

Moreover, due to losses, thousands of employees were laid off, some of them were sent on leave without pay or their salaries were cut. Not just that, the government also had to extend the deadline for submitting bids for Air India five times during the year.

Based on a Bloomberg analysis of data from flight tracker OAG, in 2021 carriers in the country had reached 87% of their pre-pandemic seat capacity through early April. The data also showed that the capacity had fallen to 71% of 2019 levels, a 16 percentage-point drop from March to April. Further eroding demand is a move by nations including Singapore, Australia, the U.K. and the United Arab Emirates to impose restrictions on visitors from India.

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What is the path ahead?

With vaccination campaigns taking place all over the world in the year 2021, there will be some positive signs and prospects for recovery. Both travellers and industry stakeholders are eager to resume travelling. Many industry experts forecast a surge in travel for the second half of 2021. Some are even referring to this potential increase as a ¡°post-war like surge¡± in travel.

However, there may be short term expenditures by the aviation industries when it comes to the cost of health-related measures. Operating costs are likely to increase for both airlines and airports because of additional health and safety requirements (e.g. disinfection, PPE, temperature checks or viral tests) before they can be passed on to consumers. This may continue until the pandemic has been completely wiped out.

Moreover, people are eager to on leisure trips, so that will be the main source to incur domestic losses unless international barricades are completely open.

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What is the future of the aviation industry in India after covid-19?

India is still overwhelmed by the Covid-19 pandemic and is gearing for the third wave. Despite, no steep recovery in this aspect people have been going out to travel to nearby hill stations like Manali and Shimla which may be the reason for the extension of this pandemic. John Grant, chief analyst at OAG said, with airlines still cancelling flights and countries throwing up more barriers, India¡¯s market could plummet to as little as 25% of normal.

However, thanks to the vaccination drive there is good news for international travel. Recently, some European countries opened their gates for Indian travellers who have been vaccinated. This step can be the beginning for all International travel to take place once again. But, until things get back to normalcy, one can't expect the aviation industry to get back to its 2019 phase anytime soon.