With the rapid increase of the incessant COVID-19 pandemic, several industries faced its consequences, the aviation industry being no different. With no regard to country borders, race and colour, the virus has caused catastrophic economic and financial loss to enterprises. Furthermore, it has also caused significant uncertainties in every aspect of our lives.
According to the ICAO reports, there has been an unprecedented decline of 60% in the total world passenger traffic in 2020 and 44% in 2021. At the same time, an approximate amount of 371 billion USD has been lost on gross passenger operating revenues of airlines in 2020. With scheduled domestic and international flights being cancelled, shortage of candidates for various pilot training schools in India, reduced passenger traffic and several other cost-cutting measures, our airline industry has been subjected to the highest degrees of severity by the virus.
Industry players are now being called to assess their accounting conclusions adequately, based on the current economic uncertainties, travel bans, and market volatility. While the mentioned impacts seem to be never-ending with almost unachievable recovery presently, is it challenging for the industry to recover entirely from its current depreciation, though? Fortunately no!
Our aviation industry has a history of overcoming some of the most formidable obstacles, ranging from flight accidents to economic losses. If we can bring forth changes in our strategies and business models to strengthen the industry’s financial stamina, then a hopeful renewal is a high possibility! A few other factors in sustaining and reviving the industry include optimal utilisation of resources, co-operation among aviation companies instead of competitions, and cost optimisations.
If the aviation industry has collapsed ever since the onset of the pandemic, it can also be picked up right from where we left it, considering we make adequate changes. Read on to know how…
● Overcoming The Reduced Air Passenger Traffic:
The behavioural change of passengers following the COVID-19 crisis, travel restrictions and the ensuing economic crisis has resulted in a calamitous drop in demands for airline services. As per the IATA reports, the revenue passenger kilometres (RPKs) shrank by 94.3% year on year in April 2020. At the same time, the ICAO reports an overall reduction of 60% in world passenger traffic in 2020. This amount comprises a reduction of 50% in seats offered by the airlines and a reduction of 2,699 million passengers carried by the airlines.
One way to recover from such an adverse state would be by accommodating air cargo business in the existing business model. Air cargo business has an important role in the airline’s profitability, despite it being the less preferred option. This is because handling cargo makes airlines look less appealing than the passenger business. Airlines with a higher share of cargo business in their overall operations are significantly more efficient than those without it.
Another alternative would be to ensure the availability of good pilots, especially in the post-pandemic time. This responsibility falls on the pilot training schools in India to recuperate such an economic recession through well-trained pilots.
● Overcoming The Loss Of Aviation Linked Jobs:
Air transport is a key input for various downstream sectors, as it enables movements in goods and services. For example, air cargo is essential for the smooth operations of global supply chains, while business travel is crucial to international knowledge transfer. On the other hand, the availability of non-stop intercontinental flights is a determining factor for the economic gains of several large firms rooted in aviation businesses. The readiness of flights is also instrumental to international tourism. Beyond inter-industry linkages, air transport is also considered complementary and a substitute to other modes of transport, such as high-speed rails. It was estimated in the pre-COVD situation that 14% of global flights could be competitively shifted to high-speed rails.
Having said that, air transport is still the most viable mode of transport between various peripheral regions. It, therefore, remains essential to territorial cohesion and development convergence.
This is one of the many reasons why air transport can never be entirely substituted with any other mode of transportation. It may seem like a flicker of hope in our current turbulent times, but it has a high potential of rebirthing into a lucrative revenue source in the coming times. Another way to combat airline unemployment would be to adapt the cooperation model by airline industries rather than competition. Having alliances with other airline companies will facilitate the optimal utilisation of pooled resources. For example, an alliance for aircraft sharing will help airlines optimise their aircraft capacities and mitigate their operating losses. Such co-operations help to balance the demand and supply fluctuations.
● Overcoming Huge Economic Recession:
An estimated loss of 125 billion USD was incurred by airports in 2020 by the ACI and a fall of global merchandise trade volume by 5.3% in 2020 by the WTO. The shock in such statistics has put the liquidity buffers, aircraft manufacturers, rental and leasing services onto a haul. This shows that uncertainties of the pandemic have precipitated into the inter-industry linkages as well, putting our aviation industry into a stockpile of financial debts. With the government imposing new air travel restrictions to tackle the second wave of the pandemic, the production and revenues of aviation firms are likely to remain more inferior in the coming year.
Government funds could aid a resurgence of the industry by asking them to consider the interests of a wide range of stakeholders and not just private shareholders. These stakeholders could include the government, airports, local authorities, travel and tourism community and anyone else whose interests have been affected during the pandemic. Their voices are likely to become more influential as airlines will heavily resort to state aids. This will help airlines to clear their debts, post-pandemic. Nevertheless, the complete recovery of our aviation industry may be a slow one, but a sure one. Hence, it could be rightfully said that the rebirth of our airlines is no more a far-fetched impossible dream.
Things undoubtedly have gone a downright spiral in every sector of our lives, but we have come so far, being stronger and better together. The same holds for our airline industry as well. Whatever be the challenges, it shall always rise above them, the way it always has! The post-pandemic time will have our pilots in most demands, to serve the country and its people. As a result, potential pilots must find space in good pilot training schools in India, such as the Aviators of Tomorrow. After all, as tough as times are right now, this is also an opportunity that must be made use of in full potential to pull our nation out of this apocalypse.