Is There Any Hope for the Airline Industry?

The airline sector is still suffering from its biggest challenge in two decades. Passenger traffic dropped 90% at the peak of the coronavirus pandemic. Airports became ghost towns and aviation’s ability to connect the world for social, cultural, and economic gain was lost.

The near-term picture for aviation remains bleak. “Instead of a boost from the year-end holiday period, we got even more restrictions,” said IATA’s Director General and CEO, Alexander de Juniac in a media briefing. “Governments tightened borders in a knee-jerk response to a virus mutation. Canada, the United Kingdom, Germany, Japan, and others added testing to their COVID-19 measures without removing quarantine requirements. In other words, they have chosen policy measures that will shut down travel.”

The airline industry story is summarized as below (IATA Annual Review 2020):

·       International air travel has shown little signs of recovery

·       Strongly rising domestic air travel shows a willingness to fly

·       There is very wide divergence among different domestic air travel markets

·       Second and third waves of COVID-19 have reversed air travel recoveries in many markets

·       Quarantine is equivalent to a travel ban, but testing boosts air travel

·       The impact on airline finances is devastating

·       Government aid has kept airlines on life support in 2020

·       Airline cash burn was substantial throughout the year

According to de Juniac, rather than a balanced approach, governments appear to be aiming for a zero-COVID world. “This is an impossible task that comes with severe consequences—the full extent of which it would be impossible to calculate,” he noted. “But, with this approach, we know for sure that the travel and tourism economy will not recover; jobs will continue to disappear; and the lockdown’s toll on people’s mental health will continue to grow—particularly on those who are separated from loved ones.”

We need a more balanced public policy approach. Evidence has shown quarantine is equivalent to a travel ban. What countries can do is to replace quarantines with Covid testing or vaccination. Airlines could provide more flexible conditions for rebooking in order to prevent people feeling unhappy from flying. Contact tracing also plays a major role in reopening the borders. While the costs of contact tracing are significant, they are "far lower than the cost of keeping the travel and tourism business in lockdown". Countries should also follow ICAO requirement to actively share information with each other to ensure implementation is in a harmonized manner. Re-establishing global connectivity will preserve travel and tourism jobs which accounts for 10% of global employment. Hopefully, more sane approaches will be considered for the health and livelihood of people globally.

 

Reference:

1.     Calls for a balanced approach to air travel, 14 Jan 2021, IATA

2.     IATA Annual Review 2020

3.     IATA: aviation needs incentives balanced with control measures, https://centreforaviation.com/