COVID-19 will have tremendous influence on Chinese aviation companies in the long run
Since the World Health Organization listed the new coronavirus epidemic as a public health emergency on January 30, 2020, China has already managed to contain spread of virus and started their return to normal life, but the airlines are still feeling effects of the pandemic.
The impact of COVID-19 on the Chinese aviation industry is not just a short-term market and revenue decline. In the long run, coronavirus pandemic will lead to three major changes, in terms of the globalization pattern, consumer behavior and production technology. These changes will inevitably have a profound impact on the Chinese aviation industry.
To begin, there will be huge changes seen in the pattern of the international market. The multi-polar development trend of globalization will also accelerate. This will result in Chinese aviation companies having more marketing interests in countries located in Asia, Europe and Africa, ones that are in their “Belt and Road” initiative.
Secondly, as fear of the pandemic is still rising and predicted high costs of travel, consumer behavior will undergo major changes in China. This means that Chinese customers will have much less desire to travel for business or leisure purposes. More and more Chinese people will try to avoid travelling internationally because of the uncertainty and questionable health concerns in foreign countries. More importantly, since the COVID-19 has already had a negative effect on Chinese economy, people will start to reduce their budgets for travel.
Also, all of the Chinese aviation companies will have to spend more money to sterilize airports and aircraft before the vaccine is put into use. This will likely increase price of flight tickets, which will put more pressure on Chinese customers’ travel decisions.
Additionally, Chinese aviation logistics will receive unprecedented attention. Whether it is a change in production technology or a change in the supply chain, the rapid emergency response capability which deals with the rapid recovery capability of economic and social development. They are all coming from the stable adaptation to Chinese national development strategy “Integrated logistics system”, especially aviation logistics system.
There are a couple of ways for Chinese government to deal with the potential difficulties of their aviation industry. Obviously, the most direct way for Chinese government is to cut down the various taxation and debt for the Chinese aviation companies and give them financial support. On the other hand, it is important for China to speed up urbanization and strengthen its transportation system, which, as a result, would transform people’s travelling habits. The latter would affect the structure of the air transportation market greatly and optimize the airline network.