Covid-19 has disproportionately influenced different sectors of the economy. The aviation industry has been significantly challenged, especially after the cessation of movement in and out of most affected areas worldwide. This research focuses on the significant reduction of clients in the aviation industry. It will also explore the loss of jobs and hence income by employees in this industry, the loss of revenue by major aviation firms worldwide, and the indirect and direct effects the demand reduction has had on related sectors. Through in-depth literature review and secondary research, the paper will also address how such problems can be addressed by ensuring sustainability in the business model. This topic is instrumental in shedding light on the impact of economic destabilization on sectors that provide essential services. The research is also crucial in analyzing the challenge and how resilience can be incorporated into the aviation industry, even when there are significant economic disruptions.
Background
The Covid-19 pandemic has significantly influenced a reduction of passengers in the aviation industry. To contain the spread of the virus, most governments worldwide have intermittently put in place travel restrictions and border closures. These restrictions have, in turn, influenced flight cancellations. Most airlines have had to only deal with cargo, hence the reduced business. The problem is gross because of the influence on revenue (Suau-Sanchez et al., 2020) assert that The International Civil Aviation Organization (ICAO) approximates that in the first six months of 2020, airlines would experience a 58% reduction in seat offers aimed at different customers. A loss of approximately 112 to 135 billion USD in gross operating revenue was also expected. While this issue was a projection made before the extent of the issue was fully known, the problem plummeted as the pandemic affected different countries for the second year.
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It is necessary to research the problem to understand its scope, effects on related sectors, and possible solutions. Additionally, given the vital role of air transport in economic development, it is instrumental in researching the topic to understand the chain effects the economy has witnessed due to the impact the pandemic has had on the aviation industry. There are also other related issues that this search sheds light on, for example, employment in the face of an economic crisis (Sobieralski, 2020). As the research helps analyze how output has negatively been affected, it will also shed light on how employees in this sector have experienced job loss and financial difficulties in the wake of the pandemic.
The Covid-19 pandemic has impacted the aviation industry, affecting tourism, trade, and the global economy. Due to the reduction of flight passengers, international tourism receipts declined to $1.3 trillion in 2020 compared to $1.5 trillion in 2019 (ICAO, 2021). Airports continue to experience revenue decrease due to approximately 64.6% loss of passenger traffic (ICAO, 2021). The aviation industry has experienced shortages in passengers due to most government restrictions to curb the movement of people. Governments have placed certain countries on the red list; thus, reducing air transportation. Also, airlines try to cope with Covid-19 restrictions such as social distancing, forcing them to reduce passenger seats. By illustration, airlines have reduced seats offered to passengers from 32% in 2019 to 38% in 2020 (ICAO, 2021). This has accumulated gross operating revenue losses from $268 billion to $319. At some point, the World Health Organization suggested that flights be grounded to curb the spread.
Literature Review
As soon as the spread of the Coronavirus became eminent in early 2020, movement cessation was one of the containing measures put in place by the World Health Organization. Air transport, particularly passenger transport, has been significantly affected (Dube et al., 2021). The declination of passengers had been a significant phenomenon for more than a year now. As new variant viruses continue to defy the steps put in place to manage the pandemic, such as vaccination, different countries are restricting traveling, and others are allowing it under strict regulation, such as testing and putting travelers under 14-day quarantine after they arrive at their destinations. These moves, as well as the fear of the pandemic, have discouraged passengers from traveling alongside cargo transportation.
According to IATA (2021), up to 39,200 specialized repatriation flights transported more than 5.4 million citizens back to their home countries after the close of borders to await the end of the pandemic. This cut out a significant part of annual air travel by expatriates back and forth within their host and home countries and other business destinations. In addition, more than 4.8 million direct aviation jobs, including airline and airport employees, airline manufacturers, and air traffic management organizations, were lost, indicating a 43% reduction of jobs compared to pre-covid times. Aviation-supported jobs, including local transport industries as well as logistics and supply chain in businesses, fell by up to 52.5%, from about 46 million to 41 million within the last year.
However, the impact of the pandemic in traveling has not only influenced international traveling and the airline industry. Domestic departures from commercial airports in the United States declined 71.5% in 2020 as compared to the previous year, with the number of domestic US markets declining 32.1% compared to 2019 (Hotle and Mumbower, 2021). In addition, multiple countries across the world are enforcing internal cessation laws and policies that restrict movement within the countries, thereby significantly impacting the economic development and situation within these countries advances that the continued drop of demand for air transport passengers due to the pandemic and containment measures threaten the viability of not only the airline industry but also related industries and firms such as tourism and the hospitality sector and business partnerships and collaboration (IATA, 2021). The reduction in business deals has seen many employees in this sector laid down (Sobieralski, 2020).
As a result of the unpredictable nature of the Covid-19 virus alongside the double mutation, which defies all initial safety measures making it almost impossible to contain, the trends in literature have changed from research presenting projections of the extent of the problem and possible solution periods, to research showing statistics of the impact. With over a year of governments' inability to flatten the covid-19 curve, the aviation industry has been able to ascertain its revenue losses by comparing the current state with the previous years (Dube et al., 2021). More sources are therefore analyzing statistics and not using speculations.
Some of the gaps in the literature include a significant focus on major airlines in notable continents such as Europe and North as well as South America. The impact is, however, not only confined to these areas but others such as Asia, Africa, and Australia. The subsequent impacts of the halted aviation industry to various economies, including those of developing and developed countries, also make a bulk of current literature and offer insight on the extended impact of covid-19 through the paralysis of the aviation industry. To a large extent, all aviation firms, both local and international, have been affected differently. Based on this problem, it can be concluded that the Covid-19 pandemic has negatively affected both small and large-scale stakeholders in the aviation industry worldwide.
Results
It is estimated that the control measures used to contain the covid-19 pandemic reduced passengers' physical contacts and traveling by a big percentage. Both local and international aviation industries were affected in many countries in a big way, and people lost their jobs due to the pandemic. There was a 71.5% decline in the domestic departures in the commercial airports in the United States. This meant less business, and it affected those that entirely depends on the airline sector for their growth and development. The cessation of movement affected businesses in many countries, and there was a massive impact on the economy. Many people could not travel, and those that did ensure to follow the Covid-19 measures set by the World Health Organizations are protecting themselves against.
Almost 99% of the travelers by air wore a mask and sanitized their hands as this was a requirement by the airlines to ensure everyone was protected. 85% maintained social distancing. The reduction of the airlines' movements caused many people to lose their jobs as many airline companies decided to reduce their staff as no many activities were going on the int airport and reduce congestions to fight the Covid19 virus. Other areas such as the tourism sectors were also affected as there was a reduction in international flight, meaning that many tourists could not visit the different countries. This also had a massive impact on many economies that depend on tourism for their economic growth.
International and domestic passenger traffic has reduced at a greater margin due to the ravaging coronavirus pandemic. Between 2019 and 2020, international passenger traffic has experienced a 66% reduction of the seats that airlines offered. This has led to an overall reduction of 1,376 million passengers (ICAO, 2021). Consequently, airlines have lost $250 billion in revenue between 2020 and 2019 only on international passenger traffic. However, between 2019 and 2021, airlines have reduced seats for international passenger traffic between 55% to 65% (ICAO, 2021). This has led to the overall reduction of passengers between 1,190 to 1,406 million air passengers (ICAO, 2021). For domestic passenger traffic between 2019 and 2021, the overall reduction of airline seats has been recorded at 15% to 19% (ICAO, 2021). Consequently, domestic airline travel has lost between 598 to 742 million passengers leading to revenue losses of $53 to $67 billion (ICAO, 2021). From the above statistics, it is evident that the aviation industry continues to lose passengers based on the severity of the Covid-19 pandemic.
The International Civil Aviation Organization (ICAO) (2021) indicates that the aviation industry in the Asia and Pacific region has suffered a massive reduction of flight passengers at -921 million. The data also shows European countries second at 769 million flight passenger reductions (ICAO, 2021). North America, including Canada, comes third at 599 million flight passenger reductions (ICAO, 2021). On the other hand, the South American continent comes fourth with 199 million flight passenger reductions, while the Middle East region has 132 million flight passenger reductions (ICAO, 2021). Africa has suffered the least flight passenger reduction at 78 million (ICAO, 2021). These figures portray the massive revenue airlines have lost throughout 2020 as Covid-19 continued to ravage the globe.
Conclusion
We will continue to monitor the impact of the Covid-19 pandemic on the aviation industry as the situations develop. We will monitor their security, operations, and financial situations. When we are sure that the pandemic can be well controlled, we can try and develop different solutions for improving and making the aviation industry better and help it make profits. All governments should ensure they have a collective and coordinated approach to fighting the pandemic and reviving the aviation industry as they try and save lives.
The impact of Covid-19 on the aviation industry has been felt far and wide, and it is essential to note that every country needs to come up with other different ways to ensure that they are not further affected by the pandemic (Dube et al., 2021). It is coming up with measures to ensure that there are no more job losses, and the industries that contribute to the economy's growth, such as tourism industries, should be controlled. The different Covid-19 control measures have had a major impact on different industries and have caused economic insecurity. Once the preventive measures are strictly followed, life can go slowly back to normal, where the cessation of movements can be lifted. People can help improve both international and domestic flights. This will help in boosting the tourism sector and all others sectors improving the economies.
The reduction in flight passengers has affected vital economic sectors such as tourism and merchandise trade. From the above data, airlines have suffered more flight passenger reductions between 2019 and 2021 compared to 2019 and 2020. The reduction of flight passengers increases with the severity of the Covid-19 pandemic as governments continue to impose restrictions on movement to curb high infection rates. International and domestic flights have experienced an overwhelming reduction in passengers due to cessation of movement. Based on region, Asia and Pacific countries have experienced a massive reduction of flight passengers, leading to heavy losses. However, Africa has experienced the slightest loss of flight passengers than other continents. The decline of flight passengers illuminates the revenue losses accumulated by airlines worldwide. Thus, this paper justifies that the Covid-19 pandemic has indeed ravaged the aviation industry by causing a reduction in flight passengers, consequently leading to poor revenues.
Recommendation
The invention of the Covid-19 vaccine is the best preventive measure, and every country should ensure that they have the vaccine and their citizens are vaccinated to fight this pandemic (Haynes et al., 2020). People should take the Covid-19 pandemic as a lesson on how they should live a safe life and always ensure they have a backup for their savings to ensure that they do not struggle to lose their jobs when there is no pandemic.
They should always be prepared for the future and ensure they are well prepared if anything comes up and shakes their financial stability. Governments across the globe should ensure to work together to help in fighting the pandemic and in making the economies better.
References
Dube, K., Nhamo, G., &Chikodzi, D. (2021). COVID-19 pandemic and prospects for recovery of the global aviation industry. Journal of Air Transport Management, 92, 102022.
Haynes, B. F., Corey, L., Fernandes, P., Gilbert, P. B., Hotez, P. J., Rao, S., ... & Arvin, A. (2020). Prospects for a safe COVID-19 vaccine. Science translational medicine, 12(568).
Hotle, S., & Mumbower, S. (2021). The impact of COVID-19 on domestic U.S. air travel operations and commercial airport service. Transportation Research Interdisciplinary Perspectives, 9, 100277. doi: 10.1016/j.trip.2020.100277
IATA (2021). The impact of COVID-19 on aviation | Airlines. Retrieved from https://airlines.iata.org/news/the-impact-of-covid-19-on-aviation
International Civil Aviation Organization (ICAO). (2021, May 11). “Effects of Novel Coronavirus (Covid-19) on Civil Aviation: Economic Impact Analysis.” [PDF]. Retrieved from https://www.icao.int/sustainability/Documents/Covid-19/ICAO_coronavirus_Econ_Impact.pdf
Sobieralski, J. B. (2020). COVID-19 and airline employment: Insights from historical uncertainty shocks to the industry. Transportation Research Interdisciplinary Perspectives, 5, 100123.
Suau-Sanchez, P., Voltes-Dorta, A., &Cugueró-Escofet, N. (2020). An early assessment of the impact of COVID-19 on air transport: Just another crisis or the end of aviation as we know it? Journal of Transport Geography.
