The Impacts of Covid-19 on the Aviation Industry
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The Impacts of Covid-19 on the Aviation Industry
Student Name:
Professors Name:
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The Impacts of Covid-19 on the Aviation Industry
Introduction
The first case of Covid-19 was declared by the World Health Organization in China on 31st December 2019. Sooner than later, the disease quickly spread and was declared a pandemic. Patients of Covid-19 show various symptoms including dry cough, fever, body aches, and breathing difficulties. It adversely has affected many industries due to the restrictions and the environment of uncertainty that came with it. The air transportation industry was among the first to be impacted due to the ability of the disease to spread easily when people come together (Maneenop & Kotcharin, 2020). The pandemic has severely disrupted the aviation and transportation industry, causing unprecedented challenges in terms of reduced travel demand, financial losses, and operational restrictions. This research paper examines the multifaceted impact of the pandemic on the Aviation industry, explores the diverse challenges faced by airlines, airports, and transportation providers, and proposes recovery strategies to foster resilience and pave the way for a sustainable future.
Impacts of Covi-19 on the Aviation Industry
Reduced Travel Demand
Airlines and airports mainly generate revenue when people travel for business and tourism purposes. The outbreak of Covid-19 resulted in an immediate reduction in travel demand by causing fear, anxiety, and panic. Sanchez, Dorta & Escofet (2020) noted that airlines in the U.S. experienced low ticket sales for tourism-related travel because of the fear that people risk contracting the disease when they travel. A study by Hotle & Mumbower (2020) revealed that the demand for domestic air transport in U. S alone declined by 95% by April 2020. A majority of those who would otherwise travel also lacked disposable income for leisure activities. Business organizations reduced their travel activities related to conferences and seminars to avoid exposing employees to Covid infection (Maroof, Jaward & Naz, 2021; Sanchez, Dorta & Escofet, 2020). In the long run, the pandemic has noticeably reduced the travel demand worldwide due to the realization that people can transact business more profitably in cyberspace without having to travel for physical meetings. The demand reduction is disadvantageous to airlines, airports, and transportation providers who depend on high travel demand to remain financially viable.
Operational Restrictions
Countries worldwide closed their borders and shut down socio-economic activities as policy measures to prevent the spread of the virus. These measures disrupted the activities of airlines, airports, and other transportation providers. For example, the major South Korean airlines had reduced the number of flights to China by 70% by January 2020 (Chio, 2020). In the U. S, domestic airlines operating in multi-airport urban centers were forced to only operate in one airport (Hotle & Mumbower (2020). These restrictions cause financial losses that airlines will struggle to recover for many years to come.
Airports and transport providers faced restrictions in terms of their capacity. The terminal capacity of airports declined due to the social distancing measures imposed by the governments (Sanchez, Dorta & Escofet, 2020). John F. Kennedy Airport, for instance, saw its operations immediately decline by 6% (Hotle & Mumbower, 2021). The overall disruption of business in the industry also restricted the scale of activities of transportation providers such as aircraft manufacturers and aircraft leasing companies.
Financial Losses
Losses to Airlines
The outbreak of Covid-19 severely affected the performance of airlines in the stock market. Maroof, Jaward & Naz (2021) noted that the overreaction of investors to the outbreak of the pandemic caused a decline in airline stock prices. The ban on cross-border travel by President Trump alone, for example, caused a 24% reduction in stock prices of airlines in the U. S. (Maneenop & Kotcharin, 2020). Airlines also suffered losses related to the cancellation of trips and the grounding of aircraft. Delta Airlines, for example, reduced its trips across continents by 40% (Maroof, Jaward & Naz, 2021). This caused massive losses as the airline had to compensate customers for cancelled flights, and forgo revenue that would have accrued from intercontinental flights. Again, these losses cannot be recovered in the short term even if a cure to the virus were to be invented.
Losses to Airports and Other Transport Providers
Airports and transportation providers suffered losses related to increased cost of operation and reduction in revenue. The outbreak of the virus came with health measures that required additional resources to implement (Forsyth, Guiomard & Niemeier, 2020). On the other hand, revenue from airport user charges declined as carrying capacity and departure activities declined. Aircraft leasing companies also had to contend with revenue loss as few customers were willing to lease their aircraft for travel.
Recovery Strategies
State and non-state actors can implement deliberate measures to help the industry recover and become resilient. Governments worldwide can initiate policy measures to enable airlines and airports to access financial resources so that they can gradually recover from the aforementioned losses. The federal government, for example, passed the Coronavirus Aid, Relief, and Economic Security Act that has enabled U. S airlines access to a total of $50 billion for post-Covid recovery (U. S Congress, 2020). Similar measures to be taken by governments may include tax exemption on materials for aircraft repair, and deferral of taxes for providers who are cash constrained.
Aircraft manufacturers, governments, airlines, and research institutions can begin thinking about the sustainability of the aviation industry. They should design aircraft that are increasingly fuel efficient to enable airlines cut operational costs. This would allow them to reduce ticket costs for customers as a way of stimulating and sustaining demand. Furthermore, governments can help airlines recover and operate sustainably by providing subsided fuels for passenger flights. This will encourage domestic and international travel while also sustaining an improved performance of airlines and airports in the stock market. Finally, airlines and transport providers need to come up with innovative business models that assure profit and sustainability even in times of uncertainty.
Conclusion
The outbreak of Covid-19 has caused dramatic disruptions in the aviation industry. The financial losses, the decline in travel demand, and restrictions of operations for airlines, airports, and other transportation providers have long-lasting implications. Subsequently, the positive effects of any recovery strategy implemented by state and non-state actors will only be realized in the long run.
References
Chio, K. (2020). South Korea unveils support for airlines amid coronavirus. All News. Retrieved from
Forsyth, P., Guiomard, C., & Niemeier, H. (2020). Covid-19, the collapse in passenger demand, and airport charges. Journal of Air Transport Management, 89(2020), 1-5.
Hotle, S., & Mumbower, S. (2021). The impact of COVID-19 on domestic U. S air travel operations and commercial airport service. Transportation Research Interdisciplinary Perspectives, 9, 1-8.
Maroof, Z., Jaward, M., & Naz, M. (2021). The impacts of covid-19 on the aviation industry: A post-Covid econometric analysis. International Journal of Innovation, Creativity & Change, 15(8), 490-510.
Maneenop, S., & Kotcharin, S. (2020). The impacts of Covid-19 on the global airline industry: An event study approach. Journal of Air Transport Management, 89 (2020)
Sanchez, P. S., Dorta, A. V. & Escofet, N. C. (2020). An early assessment of the impacts of Covid-19 on air transport: Just another crisis or the end of aviation as we know it? Journal of Transport Geography, 86(2020), 1-8.
U. S Congress. (2020). H. R.748. CARES Act. Retrieved from
The Impacts of Covid-19 on the Aviation Industry
Student Name:
Professors Name:
Institution:
Date
The Impacts of Covid-19 on the Aviation Industry
Introduction
The first case of Covid-19 was declared by the World Health Organization in China on 31st December 2019.
The pandemic has severely disrupted the aviation and transportation industry, causing unprecedented challenges in terms of reduced travel demand, financial losses, and operational restrictions. This research paper examines the multifaceted impact of the pandemic on the Aviation industry, explores the diverse challenges faced by airlines, airports, and transportation providers, and proposes recovery strategies to foster resilience and pave the way for a sustainable future.
Impacts of Covi-19 on the Aviation Industry
Reduced Travel Demand
Airlines and airports mainly generate revenue when people travel for business and tourism purposes.
The outbreak of Covid-19 resulted in an immediate reduction in travel demand by causing fear, anxiety, and panic.
The demand reduction is disadvantageous to airlines, airports, and transportation providers who depend on high travel demand to remain financially viable.
Operational Restrictions
Countries worldwide closed their borders and shut down socio-economic activities as policy measures to prevent the spread of the virus
.
Financial Losses
Losses to Airlines
The outbreak of Covid-19 severely affected the performance of airlines in the stock market.
Maroof, Jaward & Naz (2021) noted that the overreaction of investors to the outbreak of the pandemic caused a decline in airline stock prices.
Losses to Airports and Other Transport Providers
Airports and transportation providers suffered losses related to increased cost of operation and reduction in revenue.
Recovery Strategies
State and non-state actors can implement deliberate measures to help the industry recover and become resilient.
Aircraft manufacturers, governments, airlines, and research institutions can begin thinking about the sustainability of the aviation industry.
Conclusion
The outbreak of Covid-19 has caused dramatic disruptions in the aviation industry.
The financial losses, the decline in travel demand, and restrictions of operations for airlines, airports, and other transportation providers have long-lasting implications.
Subsequently, the positive effects of any recovery strategy implemented by state and non-state actors will only be realized in the long run.
References
Chio, K. (2020). South Korea unveils support for airlines amid coronavirus. All News. Retrieved from
Forsyth, P., Guiomard, C., & Niemeier, H. (2020). Covid-19, the collapse in passenger demand, and airport charges. Journal of Air Transport Management, 89(2020), 1-5.
Hotle, S., & Mumbower, S. (2021). The impact of COVID-19 on domestic U. S air travel operations and commercial airport service. Transportation Research Interdisciplinary Perspectives, 9, 1-8.
Maroof, Z., Jaward, M., & Naz, M. (2021). The impacts of covid-19 on the aviation industry: A post-Covid econometric analysis. International Journal of Innovation, Creativity & Change, 15(8), 490-510.
Maneenop, S., & Kotcharin, S. (2020). The impacts of Covid-19 on the global airline industry: An event study approach. Journal of Air Transport Management, 89 (2020)
Sanchez, P. S., Dorta, A. V. & Escofet, N. C. (2020). An early assessment of the impacts of Covid-19 on air transport: Just another crisis or the end of aviation as we know it? Journal of Transport Geography, 86(2020), 1-8.
U. S Congress. (2020). H. R.748. CARES Act. Retrieved from
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