The COVID-19 pandemic has not just changed some people’s lives, it has affected absolutely all areas of activity – markets, logistics, politics, and many others. This paper focuses on the effects of the global outbreak of the virus on the aviation sector. The unexpected crisis is rapidly developing, and the question arises whether this field will be able to survive it without the state’s financial assistance. The virus allowed people to rethink and re-evaluate everything their lives are based on. Aviation is an essential element of global business as it provides the fastest transportation. Jobs, tourism, and business development, which are possible thanks to this industry, have a significant impact on the global economy. Changes and the crisis in the aviation field will negatively affect not only this area but also the entire world economy.
In order to stop the expansion of the disease, countries have either banned or minimized the number of flights. The crisis affects many stakeholders – manufacturers of aircraft and spare parts for them, owners of airports and airlines, their employees, and others. Planes remain on the ground, a minimal number of people buy tickets, and employees need salaries and work. IKAO has investigated what effects the pandemic has on various spheres (See fig. 1). Even after the end of the COVID 19 pandemic, the airline industry will have to recover for a few years to reach the level that was before the pandemic. Slotnick (2020) reports that one of the best scenarios is a recovery by 2023, but it seems less likely now. As events develop and the virus spreads, a new assessment will be necessary.
The hardest part of this time will be for the small companies that the pandemic caught in the moments of expansion and development. Large airlines have certain reserves and can provide financial security for a longer time. Nevertheless, because of the unpredictability of the virus, it is not clear whether these measures are enough. Mazareanu (2020) compared the number of flights in 2019 and 2020 to understand the scale of the problem. It was found that some countries have experienced declines of more than 90 percent. For example, in Italy, this figure is 98%, and on average, in Europe – 88% (Mazareanu, 2020). The industry’s financial losses around the world were estimated at an approximate amount of 314 thousand US dollars. Depending on the duration of quarantine measures, the number may still change.
Industry representatives need to come up with plans for recovery after the end of the pandemic. The main factor in the industry recovery will be the demand for passenger tickets. Here, the ability of companies to adapt and respond quickly to changes will play an important role. For example, they can offer discounts and promotions on tickets, make other marketing manipulations that attract customers. One of the essential factors affecting the airline industry is oil. The crisis is accompanied by a sharp drop in its prices, up to negative marks. Airlines could take advantage of this, but while lower fuel prices provide a desirable reduction in operating costs, this advantage is partially reduced as a result of a sharp decrease in load levels.
Hopes are also placed on the financial assistance of the state in maintaining the industry. However, such payments – loans, help in paying wages, cannot be a long-term source of income, since COVID 19 has affected all areas of the economy, and they also require attention. The main measures that states can take at the moment are reducing taxes for companies, providing them with certain benefits, and postponements in loan payments.
Drastic changes also occurred in cargo transportation using aircraft. Due to reduced capacity and the cancellation of more passenger flights, which carried about half of the cargo, prices for these services increased. Although airlines have managed to adapt planes to the changes, the need for shipment is still not adequately met. At the same time, business aviation, which is necessary for top executives’ movement, felt the least of the pandemic’s consequences. However, its share is not so influential as passenger or cargo transportation.
For several years until 2020, record passenger flows were transported by airline companies around the world. However, the disease known as Coronavirus stopped all world movements, changing the world economy forever. The pandemic affects all areas of aviation, such as aircraft design, repair, maintenance of airports, and others. Among the different types of civil aviation, the most significant changes occur in passenger transportation, on which the entire industry’s success depends. All these changes will be deeply reflected in the whole world economy, and it will take years to recover. Governments of states can provide as much assistance as possible by proposing changes to specific rules, tax incentives, and other measures. A crisis of such a scale can be an occasion for radical changes in aviation. The system itself can be restructured to be more flexible and cost-effective. It may also force the company to change its ticket sales policy.
References
Economic Impacts of COVID-19 on Civil Aviation. (2020). Web.
Mazareanu, E. (2020). Coronavirus: impact on the aviation industry worldwide – Statistics & Facts. Statista. Web.
Slotnick, D. (2020). The airline industry will be ravaged for years to come and the effects will be felt across the entire economy, a new Moody’s report says. Business Insider. Web.