Airlines in fight for survival as coronavirus spreads
Mar 15, 2020 21:26:43 GMT
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Post by andypspotter on Mar 15, 2020 21:26:43 GMT
The coronavirus outbreak has become a fight for survival at airlines across the world.
In the key American, Asian and European markets, carriers are retrenching as they face ever-decreasing demand for air travel.
Events are now significant enough to suggest that the industry likely to emerge from this crisis will be smaller than, and structurally different to, the one that entered it.
Initial optimism that the impact of the coronavirus’ spread might be contained to China and adjacent markets has quickly given way to concerns about a worldwide outbreak combined with a global recession.
At every turn, seemingly sensible, evidence-based assumptions made about how the outbreak would develop have proven wide of the mark as the situation worsens and governments urge people to avoid unnecessary travel – or block it altogether.
Airlines have reached a crisis point at astonishing speed, perhaps providing the ultimate example of how beholden they can be to factors outside their control.
The irony is that weeks into 2020, the industry had already grappled with – and appeared to overcome – several negative factors, including those related to events in Iran.
What the airline industry would give to return to those heady days.
The immediate question is whether carriers can survive this downturn in the short-term. Beyond that – and it cannot be taken for granted that the impact of the virus will dissipate any time soon – many heavily bruised operators might still struggle to survive the Northern Hemisphere’s winter season, for example, when the momentum given by bumper revenue from the busy summer season is crucial.
With this in mind, most analysts reasonably suggest that several carriers are likely to follow UK regional operator Flybe in collapsing in the coming months, potentially creating a new round of chaotic consolidation.
Away from the direct financial impact of the outbreak, it is also clear that decisions implemented by governments and regulators now in haste could become long-term requirements and give the sector a new complexion.
See, for example, how the increased security checks and stipulations post-9/11 are still in place today.
Such decisions need not necessarily have a negative impact on the sector.
Indeed, the coming months are likely to offer the clearest indication yet of whether governments and regulators across the world are willing to relax taxation and other burdens to aid the survival of airlines – despite the pressures and obligations they face to ensure carbon-emitting industries pay their way.
Huge events such as the virus outbreak also carry the potential to create new norms in terms of consumer behaviour. Could, for example, the widespread reduction in corporate travel fundamentally change habits in that regard once the virus threat has passed?
Might a generation of younger people already wary about commercial aviation’s impact on the environment take an even firmer line on avoiding air travel, having learned to largely live without it for several months?
And might the rapid international spread of this virus be a fillip to those seeking to move the world away from an internationalist agenda and more towards the protectionist measures and borders?
There are many reasons to believe that the answer to all of these questions is “no” – not least the fact that airlines have weathered big storms in the past.
But there are undeniably few positive factors to offset the gloomy picture, aside from low fuel prices.
For now, the industry that prides itself on being “the business of freedom” can only hold on and attempt to minimise its losses until the desire and ability of people to excercise that freedom returns.
In the key American, Asian and European markets, carriers are retrenching as they face ever-decreasing demand for air travel.
Events are now significant enough to suggest that the industry likely to emerge from this crisis will be smaller than, and structurally different to, the one that entered it.
Initial optimism that the impact of the coronavirus’ spread might be contained to China and adjacent markets has quickly given way to concerns about a worldwide outbreak combined with a global recession.
At every turn, seemingly sensible, evidence-based assumptions made about how the outbreak would develop have proven wide of the mark as the situation worsens and governments urge people to avoid unnecessary travel – or block it altogether.
Airlines have reached a crisis point at astonishing speed, perhaps providing the ultimate example of how beholden they can be to factors outside their control.
The irony is that weeks into 2020, the industry had already grappled with – and appeared to overcome – several negative factors, including those related to events in Iran.
What the airline industry would give to return to those heady days.
The immediate question is whether carriers can survive this downturn in the short-term. Beyond that – and it cannot be taken for granted that the impact of the virus will dissipate any time soon – many heavily bruised operators might still struggle to survive the Northern Hemisphere’s winter season, for example, when the momentum given by bumper revenue from the busy summer season is crucial.
With this in mind, most analysts reasonably suggest that several carriers are likely to follow UK regional operator Flybe in collapsing in the coming months, potentially creating a new round of chaotic consolidation.
Away from the direct financial impact of the outbreak, it is also clear that decisions implemented by governments and regulators now in haste could become long-term requirements and give the sector a new complexion.
See, for example, how the increased security checks and stipulations post-9/11 are still in place today.
Such decisions need not necessarily have a negative impact on the sector.
Indeed, the coming months are likely to offer the clearest indication yet of whether governments and regulators across the world are willing to relax taxation and other burdens to aid the survival of airlines – despite the pressures and obligations they face to ensure carbon-emitting industries pay their way.
Huge events such as the virus outbreak also carry the potential to create new norms in terms of consumer behaviour. Could, for example, the widespread reduction in corporate travel fundamentally change habits in that regard once the virus threat has passed?
Might a generation of younger people already wary about commercial aviation’s impact on the environment take an even firmer line on avoiding air travel, having learned to largely live without it for several months?
And might the rapid international spread of this virus be a fillip to those seeking to move the world away from an internationalist agenda and more towards the protectionist measures and borders?
There are many reasons to believe that the answer to all of these questions is “no” – not least the fact that airlines have weathered big storms in the past.
But there are undeniably few positive factors to offset the gloomy picture, aside from low fuel prices.
For now, the industry that prides itself on being “the business of freedom” can only hold on and attempt to minimise its losses until the desire and ability of people to excercise that freedom returns.