When can the airline industry take off again?

Paul Myers MBA

The global pandemic brought the aviation industry crashing to earth setting in motion huge changes

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Image by Frank Winkler from Pixabay

The shockwaves rippling across the travel industry is beyond words. The airline industry is one segment that’s reeling from the aftershocks.

In 2020, the number of passenger aircraft in service dropped from over 20,000 to just 200, an unprecedented collapse of 99 per cent.

It’s likely that air travel will recover at some point, in some form, of that we can be certain given that it’s the fastest way to travel long-distance.

Strong visionary leadership will be vital going forward too. The how, when, and to what degree it will return remains a mystery.

Prior to the global-grounding, the airline industry wasn’t in great shape, financially. With over 90 per cent of aircraft grounded, income dried up, erased altogether for some companies.

With zero traffic, airports and associated operators were at a standstill too. Even manufacturers are in the depths of a severe crisis.

A business whose costs still have to be paid at least in part, with no income, can only continue to exist if they have the following:

  • Healthy cash reserves
  • Vast lines of credit, or
  • Secure government support

Although this is a finite scenario, there will be an end at some point, but when?

Enforced Closure

The aviation industry was shut-down by decisions undertaken by governments. This means that there is a good chance that funds from public coffers, a source of assistance, will be justified.

As mentioned, some airlines and manufacturers were in poor condition before the crisis. If governments simply vomit subsidies industrywide, which is underway, leadership, competition, and efficiency will suffer. As will the consumer, the taxpayer, ironically those who will have to stump up the cash to keep airlines afloat, airborne rather.

Wealthy nations will bail out their high flying-friends, a disadvantage to industry players from poorer nations.

It’s also a disadvantage for well-managed, profitable airlines who can survive on their own buck. In the aftermath though, these well-run companies may find it difficult to compete with state-funded companies.

This is a threat to the aviation industry, decades of private-enterprise progress will sharply hairpin into reverse.

Europe’s leading global airline is losing $1 million an hour and needs a bailout (Cnn.com, 2020)

So what might government intervention mean for the future of travel?

The aviation industry

One school of thought is that nothing will be the same again. This sweeping statement is somewhat unconvincing if we benchmark against what happened since the financial crash in 2008. In the decade that followed the bailed-out banks soon behaved like banks again.

On the flip side, as far as the aviation industry is concerned, the impact could be considerable, for quite a while.

Consider airports for a minute. Health checks on top of existing security checks will add cost and eat into time for frequent travellers.

Will this see the end of low-cost air travel? That remains to be seen.

You see it's likely that fewer airlines will be around in 2021, some have collapsed already. Others will be acquired, impacting competition.

To survive in the medium-term, airlines, indeed any business must be profitable. To meet these objectives airfare tickets have to rise.

Social distance has to be considered given that it will determine how crowded a plane can be. If this is even possible or viable for airlines.

Simple arithmetic tells us that with 50% occupancy prices will double.

Then there’s user adoption. Are we prepared to pay double or even willing to queue longer in a crowded airport?

Trusting the health of a stranger standing next to us will have implications on air travel in the future. Travellers may need a health card to even board a plane, or just to gain access to an airport.

Will 'normal' service ever resume? Ad will there be enough piolts?

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The environment

There’s also climate change to consider and what impact air travel would have had on the future of the planet if it continued to grow unabated.

Environmentalists are encouraged by the sudden response to the global pandemic. It demonstrated mass mobilization is possible in a severe crisis.

That’s something for all of us to think about.

Then there's cashflow. Billions will be spent to fight the virus, diminishing resources to spend elsewhere. The stunning impact of this sudden economic shutdown is alarming. We should all take note of the unbearable, and unsustainable costs of an economic freeze.

If we're motivated by climate or health we can't ignore economic implications because they’re interdependent. Either one could trigger other events, like a post-pandemic increase in poverty or food shortage.

The downside for environmentalists is that few people, industries or governments, will rush to repeat this type of event again. Not on this scale.

Climate initiatives must be gradual, not abrupt, but do we have time is the question. Environmental taxes is a new economy that could be used to curb or punish polluting activities.

Take the motor industry, for example, the shift towards electric vehicle technology will erase the need for harmful fuel emissions in a generation.

But the question remains — will planet earth have enough time?

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Final Thoughts

One revelation from this pandemic has been the sheer number of travellers that have virtually stopped, overnight.

If the cost of air travel increases in general, carbon taxes should increase accordingly, if imposed. If this is the case then the benefit of this crisis could alleviate the next. One where climate change is taken seriously.

Not to be insensitive to industries decimated by this event, but environmentalists might argue that mother nature was already on life support.

There are no antibodies for planet earth. If she gets sick, I mean really ill, humanity will soon follow.

What this virus has done, ignoring the economic impact is to give mother Earth a much-needed rest bite and send us a stern warning in the process.

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Innovative Entrepreneurial thinker & Dreamer. I write about Leadership, Startups, Business, & Personal Growth. Connect with me here: https://www.linkedin.com/in/paul-m-ecommerce/

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