At the start of the year, no one could have predicted just how much of an impact the Coronavirus would have on our daily lives. A few months into the year, that for many was a starting point into a new decade with a renewed sense of optimism, the economic toll of the outbreak has had an unprecedented effect. But no other industry has been hit as much as the aviation industry and others that depend on it for survival.
The COVID-19 pandemic will definitely leave its mark on the aviation industry forever. The chain of actions or perhaps reactions in the past few months has been quick and sudden, all in a bid to contain the spread of the virus. The world over, airlines have had to ground most of their fleet and, in some instances, their entire fleet. Governments around the world have imposed restrictions on air travel. Some countries have banned international and domestic commercial flights altogether.
Regional airlines have been disproportionately affected by the crisis, because they often have smaller balance sheets and relatively fewer resources to weather the financial storm. With this backdrop, the industry faces massive pressure on cash flow from extraordinary travel restrictions and a tremendous drop in passenger demand. According to the COVID-19 Airline Tracker, as of the end of March over 117 airlines around the world had grounded 90% or more of their capacity and over 167 had grounded at least 40%.
According to the International Air Transport Association (IATA) the global hit to the industry is projected to be $29 billion this year – a 4.7% industry-wide drop in revenue per passenger kilometre. By mid-March, African airlines had chalked up a combined $4.4 billion in losses.
As an industry that does not operate in isolation, its challenges have a direct and indirect bearing on other industries. The tourism and hospitality industry is also hard hit by the COVID-19 crisis; hotels have had to temporarily close down and most tourists cancelled their bookings. To put this into context, Zambia has lost about $7 million in revenue following the cancellation of tourism packages across the country in the wake of the COVID-19 pandemic, according to the Ministry of Tourism and Arts.
The new normal
The exact timeline of economic recovery remains unclear, but the impact will eventually pass. Once this is all over, people will travel again. However, we need to understand now that the aviation, tourism and hospitality industries will be facing a new ‘Post-COVID-19 reality’, where companies are all competing for the hearts and minds of cautious travellers – likely in some form of a sustained economic downturn driven by this crisis.
The new normal will likely include everything from mundane sanitation and hygiene practices to broader topics such as the health of nations, regions or specific destination points, the role of travel insurance, and issues unique to specific modes of travel.
Also, as price-sensitive travellers may be looking to trade down on products and comforts, we are likely to see shorter booking windows, and possibly more trips with lower budgets and much briefer itineraries. But there may be more; we need to use this time to begin to anticipate what that new normal might look like and prepare for it.
For an airline like Proflight that has been in business for almost three decades, major crises like COVID-19 almost always fundamentally change and evolve the status quo. As such, it’s not just a matter of getting our industry’s engine restarted. Instead, the collective stakeholder ecosystem (tourism and aviation) must understand what has changed, and what will best position the industry to grow together and become a force once again in the new Post-COVID-19 world.
Silver lining?
The industry’s vulnerabilities are multifaceted, but its ability to deal with impacts associated with these vulnerabilities in the past puts it in a good position to overcome the COVID-19 crisis.
To echo the UN World Tourism Organisation, it is against a backdrop of travel restrictions being introduced, the importance of international dialogue and cooperation has never been more important.
The COVID-19 challenge represents an opportunity to show how solidarity can go beyond borders.
As the impact of COVID-19 lessens and demand increases, it is crucial that we act in a proactive manner; we need to stop treating this crisis like business as usual. There are no rules or flight plans for this situation, and the right answer is continuously changing. The industry cannot be limited by the thinking of the past or the tried and true.