When will the aviation industry take off again?

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Chappy Hakim Air Force Chief of Staff (2002-2005), author of Tanah Air Udaraku Indonesia (“My Aerial Homeland, Indonesia”)

IO – The Covid-19 pandemic has ravaged the global aviation industry, particularly airlines and aircraft manufacturers. The industrywide sharp downturn is without doubt the worst moment in global aviation history.

In 2020, international flights for passenger airlines have taken a nosedive, with dozens of airlines going bust. The ones that seem to be surviving are cargo and charter airlines.

As the world steps into 2021, there are of course many hopeful questions about when the aviation industry can bounce back.

Since the end of 2020, the hardhit sector appears to be slowly recovering. This of course gave a renewed sense of hope that global airlines will be able to survive the pandemic.

Airlines and air travellers definitely hope that the discovery of Covid-19 vaccines can help the aviation industry recover in the near future.

Unfortunately, the analysis and study conducted by the International Air Transport Association (IATA) paint a different picture.

They were convinced that although the Covid-19 vaccination is underway worldwide, demand for air travel will probably not recover for a few years. Even then, it will not return to pre-pandemic levels until perhaps 2024.

The Covid-19 pandemic is indeed an unprecedented crisis facing the global aviation industry. Average revenues have decreased from US$838 billion in 2019 to only US$328 billion in 2020. This trend is projected to continue until at least end of 2021.

According to Aviation News, the prediction made by IATA is based on the latest data obtained from the industry recently. IATA Director General and CEO Alexandre de Juniac said that 2020 will be remembered as the worst year for the global aviation industry.

On average, airlines around the world have cut their costs by nearly US$1 billion each day in 2020. Although there was US$173 billion financial support from the government, many airlines are staring at bankruptcies. We can imagine that if there is no financial support from the government, the situation is bound to get even worse.

According to IATA’s estimation, the number of passengers fell to 1.8 billion in 2020, a level seen in 2003. Compared to about 4.5 billion passengers in 2019, the number of passengers has seen a record decline of almost 61% in 2020.

This occurred as a result of the drastic drop in the number of travelers who delayed or canceled their flight plans during the pandemic. This has resulted in a decrease in airline revenue to the tune of US$191 billion in 2020. This represents a third of the US$612 billion generated in 2019.

Furthermore, IATA noted a trend for air travelers to shift to domestic trips with relatively short distances, compared to long-distance trips on international routes, because, among other things, it is considered safer.

This shows that despite hope that the aviation industry will see better performance in 2021, the domestic market looks set to outpace international travels that are still constrained by the lockdown measures intended to curb Covid-19 transmission. Still, passenger volume cannot be expected to return to a 2019 level, at least not until 2024. Although almost all countries are affected by the Covid-19 crisis, some regions are expected to recover faster than others. IATA predicts airlines in Asia Pacific will recover first.

Chinese airlines are likely to be ahead in 2021 propped up by the country’s huge domestic market. Many have, indeed, returned to profitability since the end of 2020. IATA notes that the reason behind this is the Chinese government’s laudable success in bringing the virus under control.

Meanwhile, airlines with sizeable cargo operations have also shown far better financial performance than those that rely solely on commercial passenger flights. Indonesia itself, with very promising domestic market, is likely to become one of the countries that will become the cornerstone of the global aviation recovery.

This of course can only be achieved through hard work and smart effort among various agencies handling of the Covid-19 pandemic, especially in ensuring the success of the vaccination program.