Featured Image Credits: Xinhua News Agency

COVID-19

COVID-19 is the exact name of the type of coronavirus which has been in the news since the start of this year. The novel coronavirus became a public health emergency of international concern when the UN’s World Health Organization declared it as such. When cases began to show up outside of China, the international community fully understood the gravity of the situation. As of the writing of this article, COVID-19 has a total of 71,442 cases and 1,776 deaths. Almost all of the deaths have been inside mainland China. Like all other industries in China, the aviation industry has been severely impacted. But how does this coronavirus affect the global airline industry as a whole? We will look at some key facts, figures and statistics to draw our conclusions.

Airlines limiting and/or stopping flights to China.

Sri Lankan Crew on a rescue flight for students studying in Wuhan, the ground zero for COVID-19. Image by Sri Lankan Airlines

Aviation has become the fastest link between countries. How the world has become one global village is largely due to the massive aviation infrastructure established across the globe. Now, China, having the largest population in the world as well as having a central location, makes it one important market in the global airline industry. It is the 2nd largest aviation market in the world after the United States of America.

Due to the coronavirus outbreak, airlines within China of course, have been affected quite badly as flights to and from Wuhan City, where the virus first began, have almost completely stopped. The cancellations began from Wuhan but soon spread to major hubs like Beijing and Shanghai from international carriers.

Many airlines (as much as 120 airlines in total) have either downscaled frequencies or cut services completely to and from major airports in China. Carriers from the countries of Australia and New Zealand through Middle East and Europe and all the way to America have cut back or completely suspended services to Mainland China. These include Singapore Airlines, Thai, Qatar, Emirates, Etihad, British Airways, Lufthansa, Delta, United and other big names. This means, passenger and cargo traffic is decreasing day by day as more airlines limit their Mainland China services.

Governments across the world are taking strict measures even for the limited flights. For example, the US government has made mandatory, a 14-day quarantine period for anyone who has traveled to the US from China. This is one of the many examples of the drastic precautionary measures that governments across the world are taking.

It is important to understand that these suspensions and cancellations mean that there are hundreds of thousands of flights at stake and, by extension, billions of dollars lost, not just for China, but for the global aviation industry and directly linked domains such as tourism. Japan for example, has taken a large hit to both its aviation and tourism industry as it has lost 16% of its total international flight capacity.

What does the International Civil Aviation Organization say?

Based in Montreal, Canada, The International Civil Aviation Organization or ICAO is a specialized agency of the United Nations that sets global aviation standards and regulations as well as makes recommendations on aviation safety and security issues. It has almost all of the world’s countries as its signatories.

ICAO, in light of the recent COVID-19 outbreak has published a preliminary report showing some alarming statistics.

In the report, ICAO states that 70 airlines have cancelled all flights to and from mainland China. And a further of 50 airlines have downscaled operations and drastically reduced capacity. This has resulted in a massive 80% reduction of foreign airline capacity to and from China. For local Chinese airlines, the reduction is by 40%.

The report states:

” ICAO’s preliminary estimates indicate that the first quarter of 2020 has seen an overall reduction ranging from 39% to 41% of passenger capacity, or a reduction of 16.4 to 19.6 million passengers compared to what airlines had projected. This equates to a potential reduction of USD 4 to 5 billion in gross operating revenues for airlines worldwide.”

ICAO also said that the impact of COVID-19 on aviation will be significantly greater than that of the 2003 SARS epidemic, as this time the flight cancellations have a greater global extent and volume. And just for the record, the losses in global aviation revenue incurred due to the SARS epidemic were estimated to be $10 Billion. In 2020, the passenger traffic of China alone is three times more than what was in 2003.

With passenger traffic, cargo businesses will also take a blow to the face as production will be affected due to people being stuck in quarantine. The financial impact will be felt across the globe, Chinese intermediate goods and products are an input of many major economies transporting it via air and even the sea.

So far, the figures and statistics point to one thing, 2020 is going to be one tough year for aviation, and that’s not all. There is yet no certainty as to how or when the coronavirus outbreak can be contained such as to resume normal life in China and hence, resume aviation activity as it was.

Image Credits: CNBC

Aviation is one sensitive industry

As much as it is dynamic and growing, the aviation industry is usually among the first victims of any disturbances in the global scene. Whether it’s political tensions, sudden economic breakdowns, armed conflicts, or even a large volcano eruption, it leaves a mark on the aviation industry.

The 9/11 attacks and the SARS epidemic are just two examples of how certain, usually unpleasant events, cost billions in revenue to the aviation industry as a whole. And since the aviation industry is linked to many other domains nowadays, it affects multiple sectors.

The good news?

In all the doom and gloom of the above mentioned figures, what’s the bright side? Continuing on the last point of how sensitive aviation is, it also is very, very resilient. While we cannot say that it has been through worse, aviation and the airline industry has been through tough times before. And it did not take a lot of time for it to recover and be back on track.

According to the OAG, a UK based firm that tracks and analyzes global airline schedules, capacity and demand will typically recover within 6 months from the peak of an emergency with the nature as a COVID-19 outbreak.

So then it becomes a matter of when this coronavirus outbreak gets under control. It won’t take long for the global airline industry to regain the capacity. As aviation has proved in the past, it can recover from the worst blows delivered to it.

 

 

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