How is coronavirus impacting the aviation industry?

Team Veye | 03-Aug-2020 impacting the aviation industry

Before the outbreak of the pandemic, the forecasted number of air passengers worldwide in 2020 was approximately 4.72 billion. The revenue forecast from air passenger traffic in 2020 before the coronavirus was 581billion USD.

When the virus started spreading in January this year, the first step most of the countries took was to close the borders and limit the domestic travel as an immediate response to novel coronavirus outbreak.

Even where flights were not cancelled, a significant reduction in passengers led to either flight getting cancelled or planes flying with much fewer travellers. This in turn resulted in massively reduced revenues. 

It is not only the passenger airline segment that got affected during this time. The global aviation industry is primarily segmented into cargo airlines and airport managing companies apart from passenger airlines.

The impact of the pandemic has gradually deepened to the entire air transport industry. It is now reaching aircraft manufacturing companies and catering & other service providing companies. One of the earliest examples was when Boeing canceled a 4.2 billion U.S. dollar deal to buy the commercial aircraft division of Embraer. 

As a major provider of airplane engines, Rolls-Royce also announced it will abandon its profit targets, delivery targets and cash reserve targets for this year and stop shareholder dividends. The gravity of the situation is realised when it is noticed that it was Rolls-Royce's first cancellation of shareholder dividends since it was privatized in 1987.

Restored passenger confidence and improved economic conditions can certainly impact both passenger and cargo sectors. Only then Airport revenue generation can take place. As the cost of operating airport infrastructure remains the same because they have very limited ways of reducing costs even when there is no activity.

There has been too much uncertainty about the crisis and industry is hopeful that the situation could get better in 2021, but still remains uncertain about the capacity getting fully restored.


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