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Travel Radar - Aviation News > News > Forward to the Past: How Quick a Recovery for Commercial Aviation?

Forward to the Past: How Quick a Recovery for Commercial Aviation?

Travel Radar
Last updated: 26 March 2020 16:00
By Travel Radar Staff 4 Min Read
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Now that most of the world’s airlines are operating with a minimal schedule–if at all–is the industry at rock-bottom and what are the prospects for a recovery?

Are we then at the nadir of the disruption? Probably. There are a few airlines carrying on with a very limited service—such as Emirates, but in this case probably under duress from governments outside the UAE to keep some service running in order to repatriate citizens–hence the Emirates about-face recently on an announcement of imminent closure. We can expect these ‘repatriation’ flights to cease by—at the latest—mid next week.

IAG’s Aer Lingus c. Flickr Commons

The pattern of passenger demand before, during and after an outbreak is broadly symmetric, with perhaps a slightly slower recovery than decline, but demand afterwards equalling that of before and rapidly surpassing it. Especially in the Asia-Pacific region, as with the SARS outbreak, the decline was severe but over relatively quickly.

But there is a large difference between previous outbreaks and COVID-19. Firstly, while previous outbreaks may have been more lethal (particularly Ebola) very few have been as contagious.  Originating in China and largely confined to bordering countries, SARS infected 8098 people with 774 resultant fatalities, hence a regional effect rather than a global one. Secondly, the impact in the East was to some degree masked by the rapid growth in the economies of the region, allowing more people with more disposable incomes, to demand more passenger seats.

The pattern of current passenger demand in China, although with some qualifications (e.g. the domestic demand is quite different from Europe) is perhaps the best guide we have at the moment.

In that country, international departure seats reached a peak in the week of 13th January at about 16.3 million and domestic seats at roughly 14.3, declining slightly to 16 and 14 million respectively at 27th January. The demand then fell drastically to the low point of 17th February at about 4 million/3.7 million seats.

Survivor? Wizz c Flickr Commons

Since that point demand in both domestic and international sectors has recovered by about 50%. Very approximately then the Chinese market will have recovered fully in another eight weeks, or roughly four months from the beginning.

For the world outside of the Far East and China, that places a recovery in mid-July. With the accumulation of demand, and low fuel prices the recovery might conceivably be a little quicker, especially if government support accelerates supply and airlines offer discounted fares to boost demand.

The question now though is given the unprecedented scope of the coronavirus, will the business revert to the status in 2019? Probably not. Where carriers were financially insecure late last year, they may not be in business by the middle of this year, and by definition are unlikely to attract government support. And who might the unscathed be? IAG, (BA, Iberia, Aer Lingus, Vueling, Level) Ryanair, and Wizz look as if they might emerge with little damage. The fate of US airlines depends on the support of the US government. Those needing substantial support will include Lufthansa and Air France/KLM. Alitalia might disappear.

Let’s re-examine in a few weeks. We’ll keep you posted.

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