From Pandemic to War
The struggles of the Aviation Industry
For the last couple of years, one of the industries that has taken the worst financial hit has been aviation.
Since 2020 the sector has had one of the most difficult times in history, a recent ICAO research on the effects of the pandemic on Civil Aviation mentioned that there was a 60% decline in the number of passengers from 2019 to 2021, “approximately a 372 billion dollars loss” and that’s is not all…
Brookfield Aviation was managing nearly 2000 aviation personnel a year before the pandemic started, then Covid came along and punched a big hole in that number. At the beginning of 2022, when everything seemed to be getting better, when there were many more people willing to travel abroad after two years of lockdown and travel regulations were easing around the world, Putin decided that it was a great idea to declare war on Ukraine, (my apologies, start a “special military operation” – maybe someone is listening), making the world unstable once again, threatening the private and commercial aviation industry by making fuel more expensive.
IATA's latest financial forecast for the industry in October, which expected airlines to lose $11.6 billion in 2022 with jet fuel at $78 per barrel and fuel accounting for 20 per cent of costs, means airlines' yields are likely to take a hit from oil prices that have reached more than $100 per barrel if those highs are sustained.
The Russian international market represented 5.7 per cent of European traffic (excluding Russia's domestic market) and 1.3 per cent of global traffic in 2021.
But contrary to what every logical thinker would predict, China’s “big three” airlines, decided to place the largest order of Airbus 320 in history . In apparently coordinated announcements, Air China and China Southern Airlines said they would each buy 96 A320neo-family jets worth $12.2 billion at list prices. China Eastern Airlines said it would buy 100 aeroplanes of the same type, worth $12.8 billion.
It's not only airlines that are taking the hit, but airports too. According to a source for the Guardian: “Heathrow airport in the UK has reported a £321m adjusted pre-tax loss for the first half of the year after weeks of lengthy queues and flight cancellations, with passenger numbers back at near pre-pandemic levels” and that’s just Heathrow struggling to cope with rebounding demand for travel.
We are living in a very important and quite interesting time in history. Despite all the external factors that are affecting the aviation industry, time has shown that we will always recover. There will be a new world order, the war in Ukraine has shown that the world can’t and most likely won’t depend on fossil fuels anymore, it’s just too risky. In the near future, new ways of alternative green energy will emerge, as Russia is running out of steam and its economy will be weakened, we might enjoy a peaceful and stable time. What will be the next hurdle? Let’s wait and see.
