Comment
Long slog to better times
May 1st 2020
It is going to be a long haul. Read More » That has become certain as the devastating damage of the COVID-19 pandemic being done to the global aviation industry and economy becomes evident.
February and March were bad. April and May are forecast to be worse. Not only are Asia-Pacific airline fleets and those elsewhere in the world grounded, airports are closing terminals and runways and aircraft manufacturers are cutting production rates by a minimum of 30%. And they had no choice.
Many of their thousands of suppliers have closed shop, unable to supply the required parts to build jets. All are furloughing thousands of staff. Asia-Pacific LCCs, which have ordered hundreds of single-aisle jets, are likely to be among the major casualties of the virus outbreak.
Their ambitious expansion plans, for the time being at least, are in tatters because any hope of a speedy V-shaped recovery appears gone. Predictions of some sort of return to normal by June or July for the industry are being treated as remote.
And even when the first shoots of recovery emerge and airlines are allowed to put aircraft back in the sky there are additional problems to overcome. An International Air Transport Association survey indicates a major challenge will be convincing travellers flying is safe and they can get back on board.
Another issue will be making flights economically viable when load factors are lowered by new rules on distancing in the air and on the ground. Many airline chief executives, such as the heads of Emirates Airline and Etihad Airways, are talking about no proper recovery until 2023.
They and others make the point that without more government financial aid most of the world's carriers will be insolvent and facing bankruptcy by year-end. If there is a positive to come out all of this could it be a more rational airline industry?
There will still be competition, but perhaps fewer airlines and more rational competition. In an industry where about 30 carriers from the hundreds of operators flying are truly profitable perhaps we will see more rational pricing policies and greater determination to have the liquidity available to survive during future crises.
If nothing else, the disastrous impact of COVID-19 should be a wake-up call for an industry that has spent years inflicting damage on itself through irrational practices, uncontrolled pricing policies, fare wars and over-capacity.
TOM BALLANTYNE
Associate editor and chief correspondent
Orient Aviation Media Group
