Description

Airlines and airports faced a sudden decline in passenger traffic, of high magnitudes. This disrupted the operational cash flow leading to severe liquidity crunch. Airlines & airports had to furlough employees, reduce operations correspondingly, and rely on state aid to ensure financial sustainability during peak periods of the pandemic (2020). International air travel has been severely impacted due to various travel regulations, uncertain travel schedules, and vaccination policies. These factors had declined at the beginning of 2021, leading to quicker forecasts of overall industry recovery. But, the second wave of COVID-19, with various mutations (Delta variant) had constricted the recovery again, leading to several travel restrictions from various countries. These regulations were again gradually relaxed in the third and fourth quarters of 2021.
Passenger confidence in air travel, recovery and growth of local tourism industry, and recovery of corporate air travel will be key deciding factors in the recovery of international air travel. Revival of the industry is to be led by the recovery and growth of domestic air travel. Even this segment was impacted by total lockdowns across countries. But, these routes, especially shorter ones, were approved to operate earlier than other routes. These routes are typically operated by Low-Cost Carriers (LCCs) that work on razor-thin margins & streamlined operations. The disruption and uncertainties caused by the pandemic negatively impacted these carriers, and they had to raise new capital & gain state aid to sustain operations. Leisure travel and demand for local tourism will be critical to the recovery phase of the industry. Several major corporate events were postponed due to the pandemic in 2020. These events have resumed in 2021 (like the Dubai Expo that was scheduled for 2020). But the corporate passengers are still in lower numbers. Corporate events, passenger confidence, widespread adoption of online meetings leading to fatigue are the critical factors for the growth in the business segment. Airports in many regions are largely owned and operated by governments (North America), and could sustain during the peak pandemic periods. Private airports in remote regions with low-to-medium passenger traffic pre-pandemic are in the most critical situation, with many airports facing closures if the depressed passenger traffic continues in such regional and remote areas. The accessibility and dissemination of COVID-19 vaccines will keep on being basic variables in the close-term recuperation of air travel. Nations with far and wide immunization dispersion have shown fast air travel recuperation, as governments ease homegrown limitations and open boundaries to global travel. The global annual airport revenues for 2020 declined by nearly 60% compared to 2019 annual revenues, as per Frost & Sullivan estimates. Reduced airline operations due to severe travel lockdowns and other restrictions have led to a major decline in airport’s aeronautical revenues. Non-aeronautical revenues also declined significantly due to the sudden dip in passenger footfall at airport terminals. Publicly owned & operated airports were in a better financial standing due to state aid, though some government airports in remote regions with minimal passenger traffic pre-pandemic faced very dire financial situations. The global airline revenues for 2020 declined by nearly 40% from 2019, due to the negative impact of the COVID-19 pandemic, as per Frost & Sullivan estimates. More than 40 airlines had to shut operations in 2020, mostly attributed to the pandemic impact, with several large carriers also being impacted. Large carriers have been able to sustain their financials due to state aid and by raising capital from several financial avenues. Low-cost carriers with strong domestic routes were well-insulated against financial crunch, even though they faced operational sustainability issues during the first half of 2020.