This article was originally published on Morning FUTURE here.
The airline industry has been grounded. Almost literally. People are not flying anymore, and the risk is that when the Covid emergency is under control, there will be no airlines left. At least not as we remember them. “Compared to ground transport, where there is more national ownership, the situation is very serious. It is likely that prices will rise steeply again because if many companies go under, the ones left will have greater power in the market. In this economic downturn where there is little chance of turning things around in the short term, it is difficult to imagine the entry of carriers with the dimensions to challenge the position of the survivors,” is the unambiguous explanation of Paolo Beria, Professor of Transport Economics at the Polytechnic of Milan.
The industry undoubtedly suffered most due to the loss of traffic which hit troughs of -90% in the hardest months of the pandemic and, despite some pick up in the summer, it forecasts closing 2020 with a -65% drop in the number of passengers compared to last year. This weighs heavily on revenues which fell by 80% during the first six months of this year, depleting the airlines’ financial resources. They relied on government support to stay afloat and have to date received 160 billion dollars in aid compared to a shortfall of 13 billion per month. Will it be enough?
“The economic impact has been very hard. We don’t know how we’ll get through this. The sector has always been vulnerable to economic crises,” Beria replies. Long haul flights will be particularly badly impacted: “I am convinced that will we fly again for holidays, pleasure and personal reasons if we can afford it, but we will be less likely to fly for business purposes. This is not as a direct result of the economic crisis, but because we have all discovered we can hold meetings virtually. In other words, this is a dual challenge: the survival of airlines on the market and how the market itself will change going forward,” Beria concludes.