Echler Solomon Feng

esfpm.com
May 29, 2020

The Future of Air Travel

Tourism and the global airline industry, [both aircraft manufacturers and the airlines] have been dealt a profound, sudden, and calamitous blow. An industry-changing epoch event, unlike anything since humankind first took to the skies over a century ago.

Worldwide, and with few exceptions, governmental and political responses to the coronavirus have in a few short weeks, resulted in the suspension of entire airline fleets. As a consequence, airline companies are canceling orders for aircraft with major global manufacturers, Boeing and Airbus among others with concomitant layoffs and redundancies already being announced in the thousands.

Even before the onset of the virus, many airlines were struggling with overcapacity and profitability, but some are now facing bankruptcy, notably Virgin, South African Airways, and Norwegian to name a few. Elsewhere nationalization rumors surround Air France and Lufthansa where the German government has already committed 9 billion euros for a 20% stake, which it hopes to sell into any recovery before 2023.

It seems probable that should the global consequences of the lockdown prove irreversible, national governments will nationalize critically important carriers so reversing 40 years of privatizing and expansion. Likewise, the airport facilities that serve them should it become necessary.

The Golden Age of Air Travel [and 'travel' more generally] would seem to have slipped away a long time ago.

The last 30 years [thanks to deregulation] have witnessed a deterioration both in flight experience and service, albeit commensurate with reduced prices for air travel and the introduction of 'point to point' travel without the need to buy a return ticket.

However, presented with new health and safety challenges and in the absence of sophisticated technologies that could radically assist, it seems more than likely that demand will fall off a cliff, certainly in the short term.

Almost 70 million flights carrying over 4 billion people departed and arrived around the world in 2019, according to the trade magazine Flight Radar, which equates to about 189000 on average every day, or 8 trillion passenger-kilometers in a year.

The growth of air travel over the past 20 years has been enormous, and numbers have doubled.

In Asia alone, it was estimated before the virus that 100 million would fly for the 1st time every year with a concomitant increase in air congestion and pollution.

But how many will fly once the lockdowns are withdrawn? Quite apart from questions of actual demand due to fear of illness and the recessionary impact on discretionary expenditures like holidays, consider the near impossibility of social distancing at airports and on aircraft. Not to mention the queues and the interminable hassle of security.

It was bad enough after the restrictions in 2001 following 911 even before this invisible viral enemy arrived.

Of course, what is terrible news for worldwide travel and tourism is good news for climate change lobbyists.

The green environmentalists have got what they wanted.

We wonder if they will be so passionate about the issues in a few years.

The prospect of another [second] wave pandemic or a mutation, and now the near-certainty of a protracted global recession has rendered the tourist resorts that the airlines serve to all but write off the 2020 holiday season. Nonetheless, some attempts are being made to resuscitate many locations from June.

Many smaller operators have shuttered their hospitality operations for good at the prospect of having to 'refit' their operations to adapt to a pandemic worthy model of accommodations, which includes abandonment of 'buffets' generally and breakfasts particularly.

Globally, tourist-related activity is estimated to employ 10% of the entire global workforce.

The worst-hit countries in the Eurozone - Italy & Spain naturally want to reactivate the vital holiday and hospitality sectors as soon as possible as they account for a considerable 13% & 15% of GDP respectively.

But with air travel being so problematic, will Northern Europeans want to come given social distancing measures on bars, beaches, and in restaurants? It is unlikely, in our view, to see tourists returning in the numbers that traveled before the pandemic.

At this moment in history, while wrestling with climate change and globalization, a pandemic 'event' has arrived that urgently questions if mass air travel is doing more harm than good. We are coming to think the unthinkable, to radically restrict air travel because, in addition to the enormous environmental costs of pollution, the downside of millions of people circumnavigating the globe has been a multiplier of the pandemic and cannot be dismissed or ignored.

Global aviation policy cannot pretend nothing has altered or happened. Protection against any future occurrence depends on the ability to shut borders, ports, and airports quickly.

Containment not expansion of these logistical hubs incorporating facilities for mass medical testing, quarantining, and enhanced border control could be required.

As devastating as the coronavirus has been, it could have been worse and it could be worse in some future time.

It's a different world we live in now from the one we left in 2019.

For most of us, it's going to mean a smaller world.