Along with other sectors of the economy, air traffic is vulnerable to external factors, such as oil crises, natural disasters, armed conflicts, terrorist attacks, economic recessions and disease outbreaks.
COVID-19 has been one of those external factors. After a rapid geographical spread of the virus -with the initial manifestation in Asia followed by a lagged response around the rest of the world- most airlines tried to operate a normal schedule until they were prevented by mobility restrictions such as border closures and lockdowns. This translated into sudden drops in flight and passenger numbers from mid-March:
In this current climate, Cranfield-led researchers have assessed the initial impact of COVID-19 on air transport and found that it is likely to lead to a smaller, consolidated sector in the future.
Early assessment of the medium- and long-term impact of COVID-19
The research – involving a series of in-depth interviews with senior aviation industry executives, along with analysis of flight and air freight data – provides an early assessment of the medium- and long-term impact of COVID-19 on air transport for both passenger and cargo traffic.
“The findings of this paper represent an early assessment that can help the aviation industry and other related industries like tourism in the preparation for the recovery period.”
Dr Pere Suau-Sanchez, Senior Lecturer in Air Transport Management
Data showed that the impact has been stronger in the international markets, than in domestic markets. There was a partial recovery of Asia Pacific domestic markets during March, fuelled by China's recovery, turning into a double-dip in April as other Asian countries experienced drops in domestic traffic in line with global trends.
The research identified some key aspects including supply and demand, traffic resilience, passenger behaviour, health regulations and business ethics, which can structurally redefine the aviation industry in the medium- and long-term.. Understanding these structural elements in an integrated way can provide more confidence in efforts to predict the future context. As the crisis evolves, the views of senior stakeholders might change, therefore a record of their early assessments also represents a valuable reference for future analysis.
Interviewees thought the crisis would lead to consolidation and a significantly smaller industry. They were also concerned about the possible differences in state aid and how that could affect the industry’s ability to host a level playing field in a post-COVID-19 aviation market.
Other COVID-19 consequences highlighted by the interviewees included:
- Full-service network carriers (FSNCs) are likely to be major losers since the recovery in international markets will be slower and they may face new competition with the potential entry of new airlines in their home hub markets.
- Regional airlines were identified as possible short-term winners during the recovery period as they could potentially help FSNCs adjust their feeding capacity.
- Low-cost carriers are expected to concentrate in primary markets with possible entry in hub airports, and a general reduction in frequencies at the route level.
- Regional and secondary airports are likely to lose out as capacity is freed up in larger markets, attracting airlines and enabling larger hub airports to reinforce their positions.
The impact on business travel
Those interviewed as part of the research were concerned about the recovery of business travel. Meetings, incentives, conferencing and exhibitions (MICE) events have been cancelled and the uneven lifting of travel bans is contributing to this concern.
Additionally, changes in working practices as a result of COVID-19 - with many people now working from home and having video conferences rather than face-to-face meetings – is also seen as a serious threat. It is likely that the current context of digital transformation and cloud apps offering better solutions for teleworking than the traditional videoconference could be a permanent one, reducing demand in the long term.
The impact on leisure travel
The recuperation of the leisure passenger segment was expected to be quicker, however, the research notes that reduced disposable incomes would curtail propensity to fly and therefore the segment would require significant support, such as route subsidies.
Fear and health concerns were identified as major issues for the leisure traveller, more so than for the business traveller. In addition, the impact of quarantining could make leisure travel impractical: if there are quarantine periods in foreign and home countries, people could need to spend a month on holiday or away from their place of work which would make it impossible to fly to certain foreign locations.
According to Muhammad Albakri, Regional Vice-President at International Air Transport Association, 86 percent of travellers are somewhat or very concerned, and 81 percent won’t consider travelling if it involves a 14-day quarantine period, as reported in Gulf News. It’s therefore likely that it will take some time for there to be a resurgence in demand for holiday packages, with staycations and local travel making a comeback first.
The impact on regulations
In regulatory terms, all interviewees of the research believed that new health screening controls would be imposed at airports, translating into higher costs for airports and passengers, but they did not consider social distancing to be a viable commercial option for airlines.
Temporary approaches to biosecurity, air bridges and travel bubbles could give travellers the confidence to fly safely, and governments the reassurance that there is a less of a threat of importing the virus and creating a second wave of COVID-19 and the need for lockdown measures.
The interviews also identified areas in which the industry could be transformed towards a more ethical business, for example around supply chains and more responsible consumption.
Want to know more?
The full paper – An early assessment of the impact of COVID-19 on air transport: Just another crisis or the end of aviation as we know it? – published in the Journal of Transport Geography, and co-authored with Augusto Voltes-Dorta, University of Edinburgh Business School, and Natàlia Cugueró-Escofet, Universitat Oberta de Catalunya, can be read on ScienceDirect.com.
You can also listen to our Aviation alumni portraits podcasts. Cranfield alumnus Maxime Debry (MSc Air Transport Management 2018) speaks openly to fellow Cranfield alumni about their career paths, decisions and ambitions.