What will be the impact of the current crisis on the aviation sector?
Unfortunately, the COVID-19 is still spreading across the European nations. Apart from the disastrous impact on health and social life of the population, the depth and the scale of the economic and financial effects are still unknow. But not looking good.
When focusing on the aviation sector, the financial crisis in 2008-2009 did hit the industry, because of the economic crisis, resulting in less business trips and less tourism journeys. The direct impact on the airline and airport industry was less dramatic at that moment then in the current crisis (steep massive drop), yet presumably lasting longer over time.
The terror attacks in Europe in 2015-2016 also resulted in a decline of passengers traffic, exacerbated by countries who advised against flying to Europe.
The current crisis strikes the aviation direct and hard. National ‘lockdown’ or not… most of the airports are, from an operational point of view, almost ‘closed’ and airlines are making unprecedented cuts to capacity and scrambling to find other places to save cash. So, the coronavirus and related travel restrictions have led to a collapse in air travel demand, adversely affecting the entire airport community: Airports, Airlines, Handlers, Security providers, Air Navigation Service Provider and the Aircraft constructers, like Airbus and Boeing. All are in survival modus, with having an impact on foreseen investments, both in OPEX and CAPEX costs. For instance, a recent study of ACI (Airport Council International) suggested that the European airports will face a loss in revenues for more than 1 billion $. What impact will this have on CAPEX projects? As an example, Copenhagen Airport in response to the COVID-19 pandemic, reduced its CAPEX budget for 2020 between 60-100 million $.
The aviation sector has proven to be extremely resilient and this crisis will also trigger the right strategic questions for the industry. After this crisis, how will airlines approach their fleet strategy? Do airports evaluate CAPEX investments with other new criteria? What will be the impact on supply chain and the dependence of Chinese product or materials? Is there a ‘push’ to a new environmental shift in the industry? Will the future evolution of travel behaviours, both leisure and business, bounce back?
The future will tell, yet when we are all consciously experiencing this unfortunate period, the right answers will come!