The coronavirus pandemic has forced many changes in the world, especially with drastically restricting our movement. It should come as no surprise that the worldwide airline industry was heavily affected due to both government restrictions and fear of contracting the coronavirus while traveling. As more people stay at home and use online services in their daily routines, some see less of a need to use air travel to complete tasks or physically meet people. While there may come a time where flying will return to and even exceed pre-pandemic levels, that industry may look quite different than how we envision it today in terms of the consumer base, how airlines’ business models adjust, and what the passenger flying experience will look like.
Despite a good start to 2020, the pandemic forced a drastic drop in air travel, including a 60% reduction in passengers flown, $35 billion in lost revenue, and 57,900 jobs lost for the six largest airlines in the US. Airlines in the US and worldwide saw record low numbers in both revenue and passengers and were forced to scale back operations and reduce their fleets. Companies laid off many employees to reduce costs, worsening the situation for many people who relied on airline industry jobs for income. Since then, the restrictions on movement designed to curb the spread of the coronavirus have forced many to stay home. Office workers and students have flocked to video conferencing apps like Zoom to continue their operations and studies. Many people came to see this as a cheaper and more convenient alternative, realizing they could still perform their daily tasks from the comfort of their own home. As people have become accustomed to working from home, many simply spend less time traveling, reducing the potential overall market for airlines. Furthermore, the pandemic has forced a much larger economic downturn that has significantly hurt employment and income levels. Previous economic downturns for the airline industry have been more resilient and typically seen strong rebounds. The 2008 Great Recession, for example, did not suffer from the same supply chain issues caused by lengthened lockdowns or reductions in movement. Not only has the economic downturn been much stronger, but the myriad lockdowns, stay-at-home orders, 14-day quarantines, and the fear of the virus spreading have also worsened the potential recovery for airlines that desperately need passengers in their planes.
As the COVID-19 pandemic rages on in the US, a vaccine may provide a strong solution. Airlines can use it to protect their employees while promoting flying as a much safer and convenient option of travel. While there is still a debate over how the coronavirus vaccine will factor into people’s lives, an example being the use of vaccine passports, the vaccine will certainly help promote a return to normalcy. For now, larger amounts of faster and more accurate COVID-19 testing will provide a decent measure that can help to restore more confidence in airports and air travel. A strong effort by world governments to jumpstart their economy with stimulus packages can also provide people with the necessary funds to consider flying again. After months of dealing with stagnant economies, world governments are likely ready to push for more open policies to reduce the losses from ineffective lockdowns. For example, countries can implement a vaccination program for tourists without quarantine, something that the Maldives is planning after vaccinating their population. In fact, despite some of the largest infection rates in the world, domestic air travel numbers in the US have rebounded relatively well since the rules for travel within the country are laxer. This is much better than international travel, which typically includes coronavirus testing and a mandatory 14-day quarantine. International travel may not see a return to pre-pandemic levels for quite some time, further hurting major airlines since international travel is their primary source of income. Still, the presence of a more vaccinated population can push efforts to open up countries, boost the tourism industry, and reduce health and safety measures that can be tedious to fly with, allowing airlines to be optimistic.
Regardless of the recovery, airlines today may have to shift their focus of their customer base due to the changing nature of how people work and travel. Overall, it is shown that people, at least in the US, are still willing to fly, but it won’t be business travelers that fill up the seats of premium cabins. The advent of online conferencing and office work has heavily negated the need for business travel, and the industry may lose many business travelers even long after the pandemic. Rather, it would be those with extra cash who are traveling for leisure who will take up the bulk of an airline’s profits. Airlines typically rely on economy passengers to offset the costs of operating planes and paying salaries while the real profit margins are based on business travelers and premium passengers. Airlines can tap into those leisure markets to revive the airline industry in any type of travel class, so we will likely see a heavy shift from business to leisure and luxury travel. This shift to a leisure market focus will depend on the tourism industry as a whole. The tourism industry heavily relies on the airline industry to bring in customers, and after a long period of staying at home, both tourists and the tourist destinations will likely be eager to return to vacation mode as soon as possible. However, that will still depend on how the further spread of the virus, vaccine status, and willingness of countries to open their borders.
On top of a steady vaccine rollout, there is more good news for air travel. How we travel post-pandemic may also see some notable improvements at all levels of the airline industry. Improved hygienic and sanitary practices will likely be implemented to restore passenger confidence in flying in a clean plane. Airports may offer more technologically advanced measures like ID scanning that does not require physical contact, as well as more efficient processing that can reduce wait times and queues. Aircraft manufacturers may even look toward producing more environmentally friendly and cost-efficient aircraft, reducing environmental pollution and consumer prices. The possibilities of innovation in the pursuit of recovery are endless, and despite the hardships that everyone has faced during the pandemic, there are a host of developments that we can look forward to as a silver lining.
Still, there are many unknowns to consider, and these improvements may not even see the light of day if airlines continue to financially suffer. The changing nature of airline business models and consumer’s tastes brings much uncertainty to predict the next step. While it is most likely that there will be a decline in business travelers along with a tedious recovery process, airlines can use the pandemic as an opportunity to adjust which markets they pursue, revamp their business models, and improve their inflight services. In the best-case scenario and in my personal opinion, the COVID-19 pandemic will have brought a harsh wake-up call to the airline industry that may change how we fly in the future, preferably for the better. I believe that many are eager to travel again for leisure after a year of restricted movement, but as mentioned before business travel will be most affected as the idea of traveling to meet with international clients will be rendered pointless with the use of online conferencing calls. Though the overall situation is improving with a faster vaccine rollout and a relative relaxation of movement restrictions so far, the industry’s future will primarily depend on both the willingness of passengers and countries to start opening up, as well as how airlines shift their business models to accommodate a new era in commercial aviation.
My name is Yee Young Cher, more commonly known as YY, and I am currently a sophomore majoring in Business Administration at USC. I am from Penang, Malaysia, but I have spend my high school years at a Connecticut boarding school called The Hotchkiss School before coming to USC. My interests generally include Sports (especially American Football), commercial aviation, economics and business, entrepreneurship, entertainment industry, and more. I also enjoy learning new languages in my spare time.