Airline Industry Hits Turbulence

Isabella Diez, Director of Operations

In 2020, the airline industry faced unprecedented losses due to the ongoing pandemic. The airlines were directly impacted by global border closures, restricted air travel, and government imposed lockdowns. The economic losses of airlines worldwide are estimated to be $314 billion USD and without a doubt have marked 2020 as the industry’s worst financial year ever. 

Passenger numbers are estimated to have plunged to 1.8 billion, down 60.5% from the 4.5 billion passengers that flew in 2019. Such passenger numbers have not been seen since 2003. In addition, passenger revenues are estimated to have fallen $191 billion which is less than a third of total revenues in 2019. With both government imposed restrictions, and a general  reluctance on the part of the general public to fly, the aviation industry remains volatile.

What 2021 holds for the aviation industry, however, is a question that remains unanswerable.

Although predictions have been made regarding the future and health of the airline industry, as the pandemic continues to be extremely unpredictable,  the future of the airline industry is also uncertain.

This year, the airline industry is hopeful that it will recover from the historical losses of 2020. The projected losses for 2021 are estimated to be $38.7 billion, a significant improvement from 2020. Revenues are also expected to increase to $459 billion, although they will still be less than 2019 figures. In addition, it is expected that passenger volume will increase to 2.8 billion but will be short of 2019 numbers by 1.7 billion. Passenger levels likely will not return to pre-Covid volumes until 2024.

Although the revenue numbers for the end of 2021 are predicted to grow significantly, the first half of this year will surely be a challenge. The road to recovery will be difficult for airlines and their employees. 

One of the main obstacles which affects the ability for the airline industry to recover are the mass air travel restrictions put in place by governments last year. Once these measures are lifted and borders begin to reopen, air travel will begin to gain momentum with safety being the main priority. This will only be viable with widespread access to the vaccine as well as increased testing. The timeline for the vaccine rollout is currently unknown, adding to the uncertainty. 

The Director General of the International Air Transport Association, Alexandre de Juniac, explains that airlines have the ability to reopen safely through the use of systematic testing, since there is no guaranteed schedule in terms of the vaccine roll out. The IATA has been preparing for the vaccine distribution but states that testing is the solution which is readily available. 

“With 46 million jobs at risk in the travel and tourism sector alone because of plummeting air travel, we must act fast with solutions that are at hand. We have fast, accurate and scalable testing that can safely do the job. The airlines are ready,” de Juniac states.  

De Juniac continues, saying, “the livelihoods of millions are in the hands of governments and public health authorities. Governments understood the criticality of a viable air transport sector when they invested billions to keep it afloat. Now they need to protect those investments by giving airlines the means to safely do business.”
Additional government support is a necessary investment and will save jobs and “kick-start the recovery in the travel and tourism sector which accounts for 10% of global GDP” says de Juniac. Governments and airlines must work in partnership to ensure that the essential airline industry will be able to make a steady recovery.

Photo by Arie Wubben, Unsplash

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