Aviation industry could take years to recover from Covid-19 crisis

03 Apr 2020

Aviation industry International seat capacity fell by almost 80% compared to last year, with half of the world’s aircraft put into storage, according to recent data. 

This indicates the aviation industry may take years to bounce back from the implications of the coronavirus outbreak, Reuters reports. 

Aircraft carriers such as United Airlines Holdings Inc and Air New Zealand Ltd have warned they will likely come out of the health crisis much smaller, and expressed fears that other companies risk surviving at all. 

“It is likely that when we get across to the other side of the pandemic, things won’t return to the vibrant market conditions we had at the start of the year,” said Olivier Ponti, vice president at data firm ForwardKeys.

“It’s also possible that a number of airlines will have gone bust and uneconomic discounts will be necessary to attract demand back,” he said in a statement.

ForwardKeys noted that the number of international airline seats had dropped to 10 million in the week stretching March 30-April 5. This marks a sharp decline from the 44.2 million recorded the same time last year. 

According to data firm OAG, years of growth in the aviation industry have been lost, adding that it could take up until 2022 or 2023 for airline companies to return to the levels that had been forecast for this year. 

Aviation data provider Cirium said that roughly half of the world’s airplane fleet was grounded and in storage. 

“While many of these will be temporary storage, many of these aircraft will never resume service,” Cowen analyst Helane Becker said in a note to clients. “We believe the airline industry will look very different when we get to the other side of this.”

Plane manufacturers are facing substantial cutbacks in wide-body production, as demand for the industry’s largest jetliners weakens, manufacturing and supplier sources said. 

Delivers of long-range aircraft, including the Boeing Co 777 or 787 and Airbus SE A350 or A330 have been hit particularly badly as airlines opt for delays or withhold progress payments. 

“Governments need to ensure that airlines have sufficient cash flow to tide them over this period,” said Conrad Clifford, Asia-Pacific vice president at the International Air Transport Association.

Such aid could include direct financial support, paving the way for loan and loan guarantees and supporting the corporate bond marked, he added. 

 

Read the latest news updates - Royal Mail criticised for safety measurements