iPADIS Sees the COVID-19 Challenge as a Unique Opportunity for Transformative Change in Global Aviation.

The Covid-19 Pandemic is the worst, truly global crisis of the modern era. The world has been daunted by the formidable challenge it poses to the health, lives and livelihoods of people, and to national economies worldwide. With over 20 million cases and 750 thousand deaths to date and numbers rising steadily, and without the prospect of effective treatments and vaccines available anytime soon, the crisis is likely to continue for some time.

The International Monetary Fund (IMF) and the World Bank (WB) project a contraction of 4.9% and 5.2%, respectively, in world GDP in 2020 and a long global recession in the years ahead. Practically no sector of the global economy has been spared the ravages of the pandemic.

While confinement and social distancing imposed by governments were alleviated somewhat by the widespread increase in work from home arrangements, virtual meetings and surges in e-commerce, amongst other alternatives to normal day-to-day activities, severe international travel restrictions, frequent changes in border entry requirements and differing national health protocols brought international travel to a virtual standstill. The result has been catastrophic declines in tourism, leisure and business travel, critically impacting the aviation industry.

Impact on Aviation Industry

The Covid-19 pandemic has had a devastating effect on airlines, critically affecting their financial sustainability. According to the International Air Transport Association (IATA), air travel demand was down 58.4% in the first half of 2020, compared to the same period last year, and member airlines are expected to end the year with total debt of about $550 billion. Recovery to pre-pandemic levels could take until 2024.

The crisis has called into question established business models of low-cost carriers and long-haul legacy carriers, as many airlines have had to reevaluate routes, layoff thousands of employees and refocus on cargo operations to survive. Some were able to avail themselves of various government stimulus packages, soft loans, and bail outs, while others have gone into bankruptcy. It is yet too early to assess the full impact of such measures on deregulation and fair competition.

Global airport operations have likewise been severally impacted, with many airports struggling to survive due to dramatic reductions in passenger traffic and corresponding drops in aeronautic and non-aeronautic revenues. In many airports, activities were reduced to cargo flights and repatriation of stranded passengers. Airports Council International (ACI) forecasts a reduction of more than 4.6 billion passengers in 2020 and an estimated loss in airport revenue of $97 billion. One important consequence is the postponement of infrastructure projects and the need to solicit government assistance.

Industries codependent on a viable, vibrant air transport sector have also seen alarming declines in revenues, employment and job security. These include aircraft manufacturers, air navigation services providers, travel and tourism, and local businesses that directly serve airline and airport operations, from restaurants, duty free shops, ground handling to commercial transportation etc.

Recovery of the Aviation Industry

In addressing the crises, the International Civil Aviation Organization (ICAO), in coordination with industry organizations and the World Health Organization (WHO), established protocols and roadmaps for the restart of international flights and the recovery of the industry. These are aimed at harmonizing operational procedures to prevent virus transmission, reassuring the travelling public of their safety at airports and on-board aircraft, and enhancing the future resilience of the industry. This is a timely and commendable action.

The success of these efforts, however, will largely depend on the confidence of passengers in the adequacy and efficacy of the new measures, whether at airports or in flight. The desired quick return of passengers also depends on public health arrangements at destination cities, hotels, local transportation to and from the airports, etc. Operators and passengers would also benefit from commonality in national border entry and health requirements.

To that end, the aviation industry and ICAO should more closely involve civil society in its recovery process. There was little, if any, input of the travelling public in the published passenger health protocols. Furthermore, because these new health protocols add yet another layer to the already challenging aviation security protocols, civil society must be convinced that the new procedures are optimal, risk based, and that they truly prioritize passenger health ahead of profitability.

The aviation industry’s long-term sustainability depends on its ability to always gauge and meet the expectations of the travelling public and other concerned stakeholders.

For example, a Deloitte Global Survey shows that millennials and members of Gen Z have remained focused on larger societal issues, both before and after the onset of the pandemic. If anything, the current reduced economic activity resulting in lower energy use, and therefore pollution, has given hope to millennials that there is still time to act to protect the planet. Having seen how quickly the earth can heal, how rapidly businesses can adapt, and how resourceful and cooperative people can be, they know that a post-pandemic society can be better than the one that preceded it. And they will continue to push for a world in which businesses and governments mirror that same commitment to society, putting people ahead of profits and prioritizing environmental sustainability.

This further demonstrates the evolving nature of the aviation consumer of the future and crystalizes the challenge they pose to efforts to restore aviation activities to pre-pandemic levels, as well as the opportunity they provide in determining the best solutions and strategies for long-term future growth, assuming those views are incorporated into the recovery process.

Recommendations

The stage is now set to reimagine, revitalize and retool the global aviation system to meet present and future challenges. While survival is a top priority for many, we must also collectively plan ahead. After all, the Chicago Convention that established the current international aviation framework was adopted during the Second World War. This should inspire governments and industry leaders to forge a sustainable future for global aviation.

To that end, iPADIS suggests the following:

ICAO should ensure greater involvement by civil society in its activities and consultative process, to ensure that its protocols, plans and roadmaps are fully aligned with the current and future expectations of the travelling public and society at large.

In addressing the Covid-19 crisis, there is a need to further enhance collaboration between the aviation industry and other sectors such as tourism, hospitality, land transportation, public health, environment etc. at the national, regional and global levels.

The aviation industry must continually develop and implement innovative technologies and procedures to dynamically meet emerging passenger health, safety, security and environmental imperatives.

Governments should review their pre-pandemic national and regional aviation master plans to account for current and emerging challenges; provide for risk-based scenario planning; enhance the resilience of aviation systems, and clearly set sustainable development goals and targets for their aviation sector.

The aviation industry should continue to demonstrate and educate the public on how it is living up to its social responsibility and its contribution to economic development, social progress and sustainability.

In short, there is consensus among aviation experts and stakeholders that Covid-19 has had an unprecedented impact on the global aviation industry, adversely affecting all its sectors and the world economy. It is without a doubt the biggest challenge the industry has faced in its history.

To meet the demands of a rapidly evolving socio-economically and environmentally aware society, the industry must continue to actively develop its consumer base in a manner that responds to changing social norms, economic realities, and public expectations. Profitability should go hand in hand with the concepts of service to humanity and net benefit to society. Those that focus on profit alone will not be able to compete in this new socially responsive environment.

The industry must reassure consumers of their health, safety, and security. It must go green and remain efficient and affordable. It must generate public goodwill to be profitable and sustainable.

The Aviation industry should not plan for a return to a pre-COVID past but rather chart a course to a profitable and sustainable future.