Social Affairs & Transport: Will Air Travel and Society at Large Ever Recover from COVID-19?
Kevan James
November 15, 2020
Most people have always taken being able to go from one place to another for granted. Even if it is a slow stroll down to the shops and back, or an amble around the local park, going out and about has seemed one of, perhaps even the, most natural thing for us as people to do. Yet all of that has, it would seem, gone into the dustbin of history - including something as mundane as going on holiday. Is mundane the right word? Yes, in the sense that for many people, going for a break every year is a given. Even if it is only a weekend away, perhaps staying with relatives or friends on the other side of town, a break from routine has always been just as unremarkable as that trip to do one’s weekly shopping (Image - Philadelphia Airport).
There are also huge numbers who take their holidays in their country of residence – indeed in the UK there has been a drive in recent years to increase the numbers of holidaymakers having their break somewhere in England, Scotland, Wales or Ireland (North or South – the Republic still has and always has had border-free and passport-less travel between it and the UK). Even greater numbers however, travel to other countries for a break, often just for the weekend with the rise of low-fare airlines and the numbers flying longer distances for a week or two are bigger still. Adding travel for work-related reasons increases the numbers substantially. Or at least, they were and it used to.
In July 2020, the International Air Transport Association (IATA), which represents some 290 airlines comprising 82% of global air traffic, issued a press release in which the organisation revised earlier forecasts of recovery for air transport downwards. The release noted:
‘Global passenger traffic (revenue passenger kilometres or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.
The recovery in short haul travel is still expected to happen faster than for long haul travel. As a result, passenger numbers will recover faster than traffic measured in RPKs. Recovery to pre-COVID-19 levels, however, will also slide by a year from 2022 to 2023. For 2020, global passenger numbers (enplanements) are expected to decline by 55% compared to 2019, worsened from the April forecast of 46%.
June 2020 passenger traffic foreshadowed the slower-than-expected recovery. Traffic, measured in RPK, fell 86.5% compared to the year-ago period. That is only slightly improved from a 91.0% contraction in May. This was driven by rising demand in domestic markets, particularly China. The June load factor set an all-time low for the month at 57.6%.
The more pessimistic recovery outlook is based on a number of recent trends:
Slow virus containment in the US and developing economies: Although developed economies outside of the US have been largely successful in containing the spread of the virus, renewed outbreaks have occurred in these economies, and in China. Furthermore there is little sign of virus containment in many important emerging economies, which in combination with the US, represent around 40% of global air travel markets. Their continued closure, particularly to international travel, is a significant drag on recovery.
Reduced corporate travel: Corporate travel budgets are expected to be very constrained as companies continue to be under financial pressure even as the economy improves. In addition, while historically GDP growth and air travel have been highly correlated, surveys suggest this link has weakened, particularly with regard to business travel, as video conferencing appears to have made significant inroads as a substitute for in-person meetings.
Weak consumer confidence: While pent-up demand exists for VFR (visiting friends and relatives) and leisure travel, consumer confidence is weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19. Some 55% of respondents to IATA’s June passenger survey don’t plan to travel in 2020.
Owing to these factors, IATA’s revised baseline forecast is for global enplanements to fall 55% in 2020 compared to 2019 (the April forecast was for a 46% decline). Passenger numbers are expected to rise 62% in 2021 off the depressed 2020 base, but still will be down almost 30% compared to 2019. A full recovery to 2019 levels is not expected until 2023, one year later than previously forecast.
Alexandre de Juniac (IATA)
“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak. What improvement we have seen has been domestic flying. International markets remain largely closed,” said Alexandre de Juniac, IATA’s Director General and CEO. “Consumer confidence is depressed and not helped by the UK’s decision to impose quarantines on travellers. And in many parts of the world infections are still rising. All of this points to a longer recovery period and more pain for the industry and the global economy,” he said. “For airlines, this is bad news that points to the need for governments to continue with relief measures—financial and otherwise. A full Northern Winter season waiver on the 80-20 use-it-or-lose it slot rule, for example, would provide critical relief to airlines in planning schedules amid unpredictable demand patterns. Airlines are planning their schedules. They need to keep sharply focused on meeting demand and not meeting slot rules that were never meant to accommodate the sharp fluctuations of a crisis. The earlier we know the slot rules the better, but we are still waiting for governments in key markets to confirm a waiver,” continued de Juniac.
“Domestic traffic improvements notwithstanding, international traffic, which in normal times accounts for close to two-thirds of global air travel, remains virtually non-existent. Most countries are still closed to international arrivals or have imposed quarantines that have the same effect as an outright lockdown. Summer — our industry’s busiest season — is passing by rapidly with little chance for an upswing in international air travel, unless governments move quickly and decisively to find alternatives to border closures, confidence-destroying stop-start re-openings and demand-killing quarantine,” said de Juniac.’
So what might that mean for ordinary members of society - people who have, up to 2020, taken going anywhere as an event of second nature? At the end of September, IATA released another statement downgrading even further the outlook for air travel. This time, IATA said:
‘The International Air Transport Association (IATA) downgraded its traffic forecast for 2020 to reflect a weaker-than-expected recovery, as evidenced by a dismal end to the summer travel season in the Northern Hemisphere. IATA now expects full-year 2020 traffic to be down 66% compared to 2019. The previous estimate was for a 63% decline.
August passenger demand continued to be hugely depressed against normal levels, with revenue passenger kilometres (RPKs) down 75.3% compared to August 2019. This was only slightly improved compared to the 79.5% annual contraction in July. Domestic markets continued to outperform international markets in terms of recovery, although most remained substantially down on a year ago. August capacity (available seat kilometres or ASKs) was down 63.8% compared to a year ago, and load factor plunged 27.2 points to an all-time low for August of 58.5%.
Based on flight data, the recovery in air passenger services was brought to a halt in mid-August by a return of government restrictions in the face of new COVID-19 outbreaks in a number of key markets. Forward bookings for air travel in the fourth quarter show that the recovery since the April low point will continue to falter. Whereas the decline in year-on-year growth of global RPKs was expected to have moderated to -55% by December, a much slower improvement is now expected with the month of December forecast to be down 68% on a year ago.’
Alexandre de Juniac again: “August’s disastrous traffic performance puts a cap on the industry’s worst-ever summer season. International demand recovery is virtually non-existent and domestic markets in Australia and Japan actually regressed in the face of new outbreaks and travel restrictions. A few months ago, we thought that a full-year fall in demand of -63% compared to 2019 was as bad as it could get. With the dismal peak summer travel period behind us, we have revised our expectations downward to -66%.”
What this downturn could mean is that the airline industry, at least as we once knew it, is at best going to be a fraction of its previous size for some time to come and at worst, is to all intents and purposes, dead on its feet. There are of course, some who will dance on its metaphorical grave, having mounted protests against air travel and airports (particularly expansion of airports) but they are a minority, although still significant in numbers. They are also not thinking clearly when it comes to the implications of a severely reduced air transport industry – or even its complete cessation.
Cargo flying represents a possible path to salvation for some airlines (American Airlines)
There is the obvious immediate consequence, that of job losses. These are not confined to the equally obvious numbers of people who actually fly the aircraft and look after travellers in the cabin. Few critics ever think of the fact that these are people with families, whose livelihoods are at stake – and behind them are thousands who deal with the aircraft before departure and after arrival at airports. There are those who maintain aircraft and keep them safe to fly in. There are even more, beyond airlines and airports, people who provide essential supplies for flight; food, aircraft parts, fuel and countless others in the chain. Already huge numbers are without work now – and there will be more to come. Is this what protestors want? Possibly it is, but the sentiment is not shared by the majority, a majority that will not be able to do as they once could.
Another aspect to this is that it isn’t just people who fly. Few truly know how many ordinary, everyday goods, including food and medical supplies, arrive by air. That last point has, to some degree, been illustrated since March 2020 by the numbers of aircraft touching down carrying vital medical equipment and medicines to help the fight against COVID-19. London’s Heathrow airport for example, is the UK’s most important point of entry as well as that for outgoing goods.
Nick Platts, Head of Cargo at Heathrow Airport said: “Cargo is a little-known but huge part of our operations. Heathrow is responsible for 29% of all UK non- EU exports, virtually all of which goes in the belly-hold of passenger aircraft, making us Britain’s largest port”.
IATA’s Alexandre de Juniac once again: “Traditionally, cash generated during the busy summer season in the Northern Hemisphere provides airlines with a cushion during the lean autumn and winter seasons. This year, airlines have no such protection. Absent additional government relief measures and a reopening of borders, hundreds of thousands of airline jobs will disappear. But it is not just airlines and airline jobs at risk. Globally tens of millions of jobs depend on aviation. If borders don’t reopen the livelihoods of these people will be at grave risk. We need an internationally agreed regime of pre-departure COVID-19 testing to give governments the confidence to reopen borders, and passengers the confidence to travel by air again.”
And that is the key word; confidence. Governments need to start showing confidence that COVID-19 (which is the result of ‘a’ coronavirus, just as the common cold is the result of three other strains of coronavirus) can be and is a disease that affects less people than the annual outbreaks of influenza do. The world has never been shut down because of a cold or ‘flu so rather than be indelibly chained to one set of opinion from one coterie of scientists – a group being increasingly challenged by other scientists – governments need to have the confidence to seek alternative opinions and respond accordingly, and not take the easy path of lockdown, restriction and ultimately, repression of once-free people.
Indeed, ordinary people themselves need to reject the politics of fear and have the confidence to take steps themselves to mitigate and keep free from infection; ordinarily most people do such things without thought regarding a multitude of other infectious conditions. Applying common sense to the present situation would not be a bad move. If that means social distancing and waiting in line to use a shop or store then distance and wait. Outside of those societies where governments rule by diktat, ordinary people need to have the confidence to challenge the governments they elect and who thus serve the people - and not the other way around. Rip off the dehumanising face coverings and start smiling at each other again (and if masks worked, why has there been an apparent resurgence of cases?). COVID-19 has been widely blamed for the present crisis that has engulfed the world but it is not the presence of a disease by itself that is to blame. It is government’s response to it that is.
Can the world, and for that matter not just the air transport industry but all those others badly affected by government actions, recover? Perhaps there will be some changes – change is inevitable for many reasons, but we are a remarkably adaptable species and resilient in so many ways. So is the airline business. The simple answer is yes, we can. It will take some time; the impact has been too devastating to be simply waved away tomorrow, next week or next month. If we start now, we might even get our Christmas and holiday celebrations back. Recovery is not only possible but just as much a given as that which we once did indeed take for granted.
© Kevan James 2020.