The State of Aviation is in peril, and its future is uncertain. Even more so for its supporting industries, which revolve around the influx of airline passengers.
However, staring into the future the analysis becomes blurry. Are we in a fundamental change in the world of travel before and after COVID? Senior Airline Correspondent Alex Martinez Rivera investigates.
I want to start this in the present. I had to cancel my 2020 plans to Puerto Rico and cancel planning for Europe. While I split the trip, my points returned but the return trip converted into a certificate.
There is a concern about the state of aviation and its future
The travel industry supports 319 million globally and gives $5.7 trillion in revenue. That seems to be a small number in the grand scheme of things, with a global quarantine order still enforceable.
The wandering travel thoughts of people everywhere are satisfied with activities such as movies, travel shows, blogs, and social media posts.
2020 was the year for tourism. Air ticket estimates according to Statista were over 4.5 billion air tickets. According to IATA, revenue numbers were supposed to hit approximately 30 billion. Tourism is the constant that remains in our lives.
That constant was broken the moment governments around the world started quarantining people.
We became a never-ending black hole
The worldwide airline industry has collapsed by $252 billion in revenue which was IATA’s latest worst-case scenario. This is coming short according to IATA’s Chief Executive Alexandre de Juniac.
The voluntary grounding of planes for miles worldwide looks like a scene from an aircraft boneyard (Kingman Airport and Industrial Park) in Arizona without the scrapping of parts.
Without passengers, the industry would have a bumpy ride to get to calmer skies.
Bottom Line: How I see Airlines & Tourism as a business model
- There is turbulence in the tourism industry, and unless we get at least a treatment for COVID-19 the airlines will continue to have a turbulent time. Most likely airlines would require second and third rounds of investments to keep airlines afloat. If that does not happen, many airlines would liquidate.
- People are becoming aware of their surroundings. That is bad for airlines and supporting industries as it is shorter timeframes and less spending.
- Rise of overseas re-nationalism, staycations, and forced mergers are rapidly materializing. Vacationing closer to or at home, foreign airlines getting back under state ownership and far-fetched airline-mergers of the past will be revisited. In some cases, these measures will even be encouraged for survival. As the saying goes: “Desperate times call for desperate measures.” An example of re-nationalizing an airline is Alitalia.
- The cruise industry needs some redefining architecture. While the airline and supporting industries have a lifeline, cruise-operators need to work on their lines of credit as the U.S. government won’t loan to them for the foreseeable future. In the short term, the reputation of the cruise industry is shot. Companies like Virgin are especially vulnerable as they are incoming companies trying to disrupt the market. We could see restructuring.
- Companies will resist the urge to send their employees traveling. There are tools like Zoom or Slack, which keeps tabs on the workforce remotely. Also, there is FaceTime and Skype. I mean, the marketplace has forced many companies to rethink their strategies. Even hiring practices have changed.
Visitors and Providers
- Visitors Beware: Country requirements might become stiffer than they already are. Places like Asia and Latin America have regulations on the type of health steps required to protect its population. We could see a wider implementation in those areas, plus initial implementations in Europe, Africa and parts of North America. That might include the requirements of airlines when a treatment or vaccine for COVID-19 becomes available.
- The marketplace demanding that airlines and supporting industries take measures to protect the population. In the end, we (the consumers) are paying, so the demand isn’t that far-fetched.
Speaking of the end, I believe this will mark an entirely new way of traveling like before COVID and after COIVD.
How strict? I gave the guidelines and I believe it is about to become that strict.
Whether the situation stays for a short or long time, it has changed and challenged the industry and created repercussions that won’t fade as easily as the flu.
We need to be ready (travelers and providers) for the new normalcy as the status quo would be hard to maintain.
What do you think about the current state of the aviation industry and its future? Does the future bring optimism, in spite of the COVID-19 situation? You can contact the author here.
Featured Image: Unsplash.