Commenting on the impact of Coronavirus on the airlines of the world, The Economist (March 15, 2020) captioned the term “Hard Landing.” It appears now that it was not a hard landing, it was more akin to a crash landing.
Brian Pearce, Chief Economist, IATA states that travel restrictions are closing down international aviation. Markets with severe restrictions cover 98% of global passenger revenues. A grim projection for all airlines.
IATA further elaborates that the impact has moved beyond our ‘Extensive Spread’ scenario implying $113 bn loss of passenger revenues (19%) worldwide in 2020. How much more opportunity cost, and cumulative loss to global GDP is anticipated? As per Bloomberg (March 6, 2020), by the year end the figures may reach a whopping $2.7 trillion which is comparable to the entire UK’s GDP.
While the trajectory of the pandemic is contingent on multiple dependent and independent variables, the forecasting wizards are cognizant of at least three primary factors: a) intensity of the viral spread and viral load of the global contagion, b) containment strategies of the governments and, c) the public response. Measuring and estimating exercise is important and critical for planning a response. Managerial adage that if you cannot measure, you cannot control, is valid.
Historically, the aviation industry is extremely sensitive to global shocks. It has nose-dived in the past at various occasions from Gulf war to 9/11 to SARS and global financial crises. But interestingly, the airline industry has displayed commendable resilience in recouping and bouncing back. As per International Civil Aviation Organization (ICAO), despite several global shocks after every few years, the world airlines have not stopped the doubling of airline growth every 15 years over the past 30 years.
Why is the airline industry so resilient? Airlines are lifelines for the economy, they are catalysts for growth and prosperity, in fact they are in many instances business enablers. So, it is in the interest of everyone, who are de facto stakeholders to help revive and thrive the fastest and most efficient mode of transportation in several specific domains of logistics and trade. Of all the stakeholders, governments are the most interested entities in helping the airlines get back on track. With everybody’s interest in view, the airlines have always out flown the projected growth trajectory in the long run.
It is interesting to note that the airlines benefit the least, or even lose money themselves while all other stakeholders make decent financial gains. Indeed, direct, indirect, induced and catalytic impact of airlines on economies is pervasive. Hopefully, Coronavirus pandemic’s steep and deadly curve will flatten out faster than projected. Statistical evidence supports and portends a positive outlook, albeit the current situation appears alarming.
Viral load is a measure of the density of viral particles per unit of volume. It is comparable to the strength of attack on its target. All individuals have different thresholds (immunity levels) to fightback a certain viral load. And, viral load is inversely proportional to the damage COVID-19 can do to the targeted person. Therefore, in an airline with confined space and an air-conditioning system that circulates the air around the cabin, viral load can muster strength through cumulative close proximity of individuals and ease and strength of contagion transfer. With such a suspicion, no airline, no passenger, and no government will risk the operation of airlines.
How would the airlines circumnavigate such a threat? In the past, airlines countered the hitherto conventional security concern with reasonable success, so why can’t this risk too be mitigated. Ensuring a screening system before boarding will preclude infected individuals getting onboard. Tests are available and greater global ubiquitous efforts are underway to make the detection, prevention and treatment of COVID-19. The cost of operation of airlines will marginally increase but in the larger interest of socio-economic development and sustained prosperity of all other stakeholders including governments, the airlines will have to bear the brunt.
The prognosis for the recovery of the stalled and crashed airline industry is, logically and statistically, an outcome that will fulfill the increasingly pervasive travel demand and the logistical need of the global populace. How long would it take it to return to climb and cruise to regain its normal flight path is questionable; but if the world is to move on, the airlines will have to fly back into the skies with greater resolve, better efficiency and higher consumer confidence. This is contrary to what some industry leaders cautiously warn that a prolonged disruption may be anticipated and that would present an existential threat to many an airline around the globe.
The biggest calamity that anyone can ever fathom is indeed the doomsday, wherein, catastrophic destruction and tribulations shall be the order of the day. Even in a situation that grave, a prophetic adage is quoted as saying that if one had a sapling or a seed to sow in his hand, then let him plant it. For those who believe, positive expectations and optimistic approach even under extreme adverse circumstances is the way forward. Pessimistic demeanor is not an option. The world needs the aviation industry and fly, it will. The sooner the better!
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Dr. Wali Mughni, PhD, FRAeS is an alumnus and the regional representative of Embry-Riddle Aeronautical University. He is also the Dean & Director of the Aviation Institute of Management, in Karachi, Pakistan. He may be reached at mughniw@erau.edu
