COVID-HQ: Corona Crisis & Air Transport – the Day After

Ioannis Settas

Athens

April 9, 2020

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In Air Transport, the devastating financial impact of the COVID-19 pandemic is more than clear. The historic drop of air traffic that in many cases has reached, or even exceeded 80% compared to last year, inevitably led to a dramatic slow-down, and even halting of operations for scores of airlines, airports and handling agents. The main challenge right now is calculating precisely, in every single case and as a whole, the exact extent of the impact and how to mitigate the effects, mostly with government assistance. In addition, the V-shaped recovery that many have initially hoped for based on previous downturns is no longer expected based on the fact that COVID-19’s impact is global and overlapping, as different geographies are in different phases of crisis. The recovery is also expected to be accompanied by a global economic recession that will make it harder for airlines to return to previous traffic volumes. In view of these unprecedented circumstances that pose vital liquidity pressure on airlines, IATA director general and CEO Alexandre de Juniac said “there is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry.” Obviously, it is not only the airlines that face a serious liquidity pressure but the air transport sector as a whole. Airports and handling agents carry their equal share in this global traffic annihilation and its financial impact, being the essential parts of the air transport system with the greatest exposure to traffic fluctuation and its consequences. A system that in essence is the one we logistically rely upon during this crisis to move critical items and supplies for our communities support and equally, will be one of the most critical assets to drive and grow economies when this pandemic is finally runs is course. Now is the time to support the aviation system as a whole, perhaps with a more liberal adoption of Keynesian economics, allowing thus for adequate and timely government intervention. Source: OAG In crisis, opportunities exist too. Assuming that governments and corporate leaders will not adopt the catastrophic/pessimistic scenario of the great depression that will be self-fuelled by late reactions and below-par initiatives, a series of lessons are there to be learned from this crisis for transformation into opportunities to the benefit of the air transport community and support of its long-term sustainability. The reassessment of airlines strategies towards a more balanced, and hence sustainable development model, will drive a series of changes that will affect networks, distributions channels, infrastructure investments and automation. Demand for greater flexibility to meet ad-hoc challenges/shocks of varying natures, will drive the change in airport operational concepts and business continuity plans, capacity and passenger flow assessments, automation enhancement and organizational change that will proportionally affect the handlers as well. Now is not the time to get bogged down in the details but, rather, to understand the magnitude of the challenge, design and implement proportionate measures to mitigate the effects of the crisis and focus on well-coordinated actions to return to full operations avoiding drawbacks and delay. Air transport will overcome the challenge and pioneer the way to drive and grow economies globally again!