Post Lockdown, What Can We Expect?

April 22, 2020

There is no question that we are facing the deepest recession in history. People seem to accept the  “reality” that nobody knows what will happen next. However, as human beings, we have to keep fighting for a brighter future so long as we can stay safe and healthy. 

 

Airlines Resilience

To get aircraft back into the skies strategic measures will need to be taken to minimise the virus transmission. Emirates has begun to conduct blood tests at the airport for passengers before travel and many airlines plan to keep the middle seats empty to enhance social distancing. Also, passengers and crews will be required to wear a mask and undergo a temperature check before boarding. These practices will need to be constantly reviewed to ensure the safety and well-being of customers, and to restore travellers’ confidence amid coronavirus fears

Airline and tour operators in Europe, such as TUI and EasyJet, have started to sell irresistible holiday packages for 2021 with more flexibilities as people want something to look forward to in the near future to compensate for weeks or months of being locked down at home. Other airlines, such as AirAsia, offer unlimited flight passes so passengers will be able to fly as many times as they wish within certain routes and periods of time. To give some incentive to air travellers Ryanair Boss Michael O’Leary said: “The minute we’re about to start flying again we’ll start doing seat sales, and so will every other airline”. Hence, we could expect an airfare race between airlines once the market recovers.

 

Research in 2017 by the University of Belgrade (Serbia) and Bari (Italy) of the business performances of 17 European airlines in 2008 and 2012 provides some indications for airlines’ resilience during this pandemic. The research shows LLCs had a better business performance than traditional airlines in both years. This was because LLCs could keep their operating cost at a relatively low level and their business model is more adaptable. So, can we expect a V-shaped recovery for LLCs? It is too soon to say, but airlines need to keep evaluating the market signals and development trends in order to synchronize their resources and investments with the rebound.

 

Air Travellers

 

Unlike other crises people don’t have a choice at the moment other than to than stay at home. Half of the world’s population have been locked down by governments to prevent the spread of the COVID-19 virus. From April we started to see some countries in Europe and Asia easing restrictions. This still requires additional measures and strict social distancing to slow the spread of COVID-19. However, at least we are seeing a positive signal that life is gradually being returned to a “new normal”.

 

For business travel demand we could expect a quick rebound, in both short-haul and long-haul, as business travellers try to reconnect their businesses. On the other hand, for leisure purpose, the general public will want to go on holiday after weeks or months being locked down as long as they can maintain reasonable safety, especially for short-haul trips. However, long-haul leisure travel will likely take longer to recover due to the cost justification and potential travel restrictions incurred upon crossing countries.

 

In conclusion, the COVID-19 pandemic is stress testing for not only our aviation industry but also the whole global economy. Consequently, businesses incapable of securing enough liquidity to cover their losses may be forced into bankruptcy. “It is the time to think the unthinkable and invent something new, that all people can do” said Emmanuel Macron.

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