Corona Virus Lockdown – A Dramatic Impact on the Aviation Industry

04 Oct, 2023 | Articles

The 2019 novel corona virus has taken an enormous toll on the global aviation sector with flight cancellations on a daily basis. The outbreak has created massive disturbances in the tourism industry, which accounts for 10% of the Global GDP, as per the World Travel and Tourism Council (WTTC). A majority of airlines have suspended flight services to and from China, imposing noticeable pressures on trade and transport.

In addition to the horrific situation the pandemic has created, it is expected to put tens of thousands of jobs at risk. WTTC has estimated that more than 50 million airline jobs across the globe are on the verge of elimination in the shadow of the global pandemic, COVID-19. The agency also anticipates Asia-Pacific, the world's fastest-growing aviation industry, to be the worst impacted — losing as many as 30 million jobs. In an approach to tackle the deadly novel coronavirus, the WHO has advised alcohol-based hand sanitizers to be installed in lavatories of passenger aircraft and goods carriers.

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The below figure represents the top locations for COVID-19 as of March 8, 2020:

1. North America:

The WTTC warns that international travel could be impacted by up to 25% in 2020, causing a monthly loss of more than USD 3.4 billion to the U.S. economy. As per The Guardian, a British daily newspaper, the travel arrest has jeopardized the jobs of over 750,000 employees in the U.S. alone. As per World Travel and Tourism Council,

  • American, Delta, and United Airlines have fallen into bankruptcy, being the worst affected by the pandemic
  • Delta Airlines has urged workers to do unpaid, volunteer work to sanitize areas and sign up for the American Express credit card. 10,000 employees have volunteered to take the option amidst overwhelming situations
  • Air Canada plans to temporarily lay off more than half of its 9,750 flight attendants, along with the suspension of many international and U.S. flights

The below figure represents the top locations for COVID-19 as of March 8, 2020Source: WHO, National Health Commission of the People's Republic of China,& CAPA

2. South America:

Small- and medium-sized aviation-related businesses, manufacturers' associations, helicopters' associations, aircraft operators, and pilots' associationsin South America have appealed governments to save the industry amidst the deadly outbreak.

  • Venezuela ordered its citizens to go under quarantine by declaring massive travel restrictions. Peru and Chile declared a national emergency and closed their borders
  • Brazil's initiatives are expected to offer the country's aviation sector some relief from the pandemic in upcoming weeks. The government intensified epidemic related aid across South America, allowing airlines to defer certain fee payments. The region's international travel demand collapsed by 85%, as per Brazil Airlines

3. Europe:

The British government is involved in talks with the aviation industry as it encountersa massive drop in the number of passengers amidst the coronavirus outbreak.

  • Virgin Group, a British multinational venture capital, has appealedthe government to provide USD 9.8 billion worth of emergency support in the face of tremendous financial pressure
  • Europe's Airbus is seeking government support amid the global crisis. Finnair and Ryanair are determined to improve short route journeys within Europe

Country-Wise Outlook
Country-Wise Outlook

Source: OECD

4. Asia-Pacific:

The COVID-19 has crushed China's civil aviation sector as well as its economy. As the pandemic quickly spread from the epicenter of Wuhan to Japan, South Korea, Thailand, the U.S., Singapore, France, Russia, Spain, Vietnam, Malaysia, Cambodia, Sri Lanka, the Philippines, India, and Canada, countries have shut down theiraerial borders to curb the spread of the virus further.

  • Chinese authorities were quick to call off more than 7,000 flights from the ten busiest airports.China also closed its Airbus aircraft component centers in Tianjin
  • India shut itself for foreign nationals and overseas citizens as the toll started rising. Many international airlines canceled more than 500 flights to and from India, as per the Centre of Asia Pacific Aviation
  • Australiais encouraging citizens to avoid all foreign travels temporarily and waiving approximately USD 430 million domestic air traffic control fees and other airline charges. Virgin Australia Holdings Ltd. has suspended all international flights till June 14
  • Singapore Airlines Ltd. and Jetstar Asia announced plans to stop flying from March 23 to April 15 amid the difficult times
  • Hong Kong has imposed temporary workforce and route reductions to keep financial distress at bay
  • The Philippines' airlines have halted air travels to and from the country since March 20 and are expected to resume on April 13.  The Philippines' Cebu Air Inc. has suspended all international and domestic flights till April 14
  • Vietnamese airlines have lost about USD 430 million in the last three months, which has affected more than 400,000 passengers per month after a travel ban on flights between Vietnam and China

5. The Middle East:

With a loss of more than 50 million passengers and USD 10 billion in revenue and more than 800,000 jobs facing elimination, Middle Eastern governments have strictly regulated aircraft permitted to land inside their respectiveborders since the virus hit the region.

  • Oman and Kuwait have suspended all international flights in and out of the country since March 17
  • Saudi Arabia to remain under complete lockdown till March 29
  • Qatar has stopped international passengers even with a residence permit from entering the country
  • Bahrain has suspended visas denying entry to travelers from China, Iran, Iraq, or South Korea
  • Emirates and Etihad Airways in the UAE as well as several low-cost carriers also suspended visas and blocked flights from Iraq, Iran, Lebanon, Syria, and Turkey

6. Africa:

South Africa canceled its airlines on a temporary basis to deal with the rising spread of the coronavirus. The International Air Transport Association (IATA) revealed thatAfrican airlines recorded losses worth USD 4.4 billion as of March 11, 2020. IATA revealed that international flight bookings in the region reduced to 20% in March and April. Domestic bookings fell by 15% in March and 25% in April. These figures have also dampened the China-Africa trade relations, taking a significant toll on their political ties.

  • Rwanda Air and Air Mauritius were among the first airlines to suspend flights to China as soon as the epidemic surfaced
  • Morocco also stopped all flights to and from the affected countries
  • As Kenya's count of the affected rose to 10 in the month of March, the country immediately introduced international and domestic travel bans to limit the spread of the virus, leading it to a total loss of 622,000 passengers, stated IATA
  • Nigeria and Rwanda have faced losses of 853,000 and 79,000, respectively, in passenger volumes so far due to COVID-19
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Impact on Top Airlines & Losses in Passenger Volumes:

Millions of passengers fly to, from, and within China per year. Global air traffic records a total of 4.3 billion annual air travelers. IATA released a share of losses in aircraft passenger volumes (March) in some of the most impacted countries around the world.

Countries Loss In Passenger Volumes
China 23%
Japan 12%
Singapore 10%
South Korea 14%
The Rest Of APEC 11%
Italy 24%
Germany 10%
France 10%
The Rest Of Europe 7%
Iran 16%
The Middle East Excluding Iran 7%
The USA 10%

American Airlines, Air Canada, IndiGo, Air India, JetStar Asia, Korean Air, Austrian Airlines, Lion Air, British Airways, Malaysia Airlines, Qatar Airways, JetStar Asia, Swiss Airlines, and United Airlineswere some of the first airline companies to halt operations to China as soon as the virus hit the country.

China's airports have recorded phenomenal losses amid the pandemic:

1. Guangzhou Baiyun International Airport:

  • Passengers: 966,796, YoY loss: 83.6%
    • Domestic: 700,179, -84.2%
    • International: 206,711, -81.3%
    • Regional: 5,906, -90.5%
  • Cargo: 79,923 tonnes, YoY Loss: 17.0%
    • Domestic: 19,843 tonnes, -44.8%
    • International: 57,283 tonnes, -1.3%
    • Regional: 2,798 tonnes, -22.9%
  • Aircraft movements: 13,044, YoY Loss: 65.6%
    • Domestic: 9,312, -67.2%
    • International: 3,595, -61.1%
    • Regional: 137, -62.7%

2. Haikou Hainan Meilan International Airport:

  • Passengers: 388,100, YoY Loss:  84.6%
  • Cargo: 9,305 tonnes, YoY Loss: 71.6%
  • Aircraft movements: 4,590, YoY Loss: 69.6%

3. Airbus:

As perXinhua Net, the France-based European plane maker Airbus was already facing anet loss of approximately USD 1.47 billion from the last year when it was hit by the effects of coronavirus at the beginning of 2020. The company has garnered another USD 238.9 millionin losses as of March 2020, following flight suspensions by the government.

4. Boeing:

Boeing announced plans to cancel CEO pay, suspend its entire dividend, and urged virus-related aid from the U.S. government for a sum of USD 60 billion. Along with the colossal losses in revenue, the company is also struck by reputational damage, economic crisis, and high political risk.

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Some of the Notable Previous Outbreaks and Their Impact on Aviation:

Time and again, the world is hit by deadly diseases, which leave their mark on the travel sector, much like any other. IATA calls the coronavirus pandemic "a catastrophe for economies and aviation,"labeling it worse than 9/11, SARS, or the 2008 global financial crisis. some of them include:

1. Severe Acute Respiratory Syndrome (SARS), 2002–2004 (China):

Historical data reveals that the SARS outbreak was at its peak in May 2003. Fears of a global spread massively hampered leisure travel and largely impacted North America and Asia's strong trade links, causing airlines to lose billions of dollars.The SARS outbreak accounted for a drop of 9.4 million international tourist arrivals into China, says the WEF. It also estimates:

  • Asia-Pacific airlines lost 8% of annual traffic, amounting to approximately USD 6 billion in revenues
  • North American airlines estimated a loss of 3.7% of the total international traffic at an estimated revenue loss of USD 1 billion

Some of the Notable Previous Outbreaks and Their Impact on AviationSource: IATA Economics

2. Avian Flu, 2005 (China):

The Avian or Bird Flu of 2005 was a significant pandemic threat. The disease had a comparatively milder and short-lived impact on the travel industry, as there was no evidence of its human-to-human transmission. IATA Economics states:

  • Asia-Pacific passenger airlines still registered a loss of USD 34 billion. The virtual halt of all services except for cargo trade resulted in an overall loss of USD 100 billion to Asia's aviation industry
  • Global passenger airlines lost USD 52 billion, amounting to 11% of the global airline revenues. The halt of all other services except cargo further increased the number to USD 350 billion (2005–2013)

3. Middle East Respiratory Syndrome Corona Virus (MERS-CoV), 2012 (Saudi Arabia):

  • Although the MERS outbreak of 2012remained focused on one single country, its initial impacts heavily slowed down the aviation sector
  • IATA Economics estimated a 12% decline in monthly Revenue Passenger Kilometres (RPK) to,from, and within South Korea in the first month of the outbreak. Air travel volumes began to recover shortly after.

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