Testing times for global aviation firms
Carriers boosting cargo operations to stay viable as pandemic blocks passengers at home
With COVID-19 quickly expanding worldwide and strict travel restrictions imposed by many countries, the global aviation industry is expected to continue to suffer heavily and the air travel market in China is set to see its first annual loss since 2008, an industry expert predicted.
Despite the coronavirus pandemic receding in China recently and domestic air travel gradually picking up, the severe conditions overseas have cut capacity of international flights to a tiny fraction of pre-contagion numbers, and it will have an unfavorable impact on Chinese carriers.
“The civil aviation industry in China will suffer losses for sure this year, and it is just a matter of how much it will lose,” said Lin Zhijie, an industry analyst and a columnist at civil aviation website carnoc.com.
“The outbreak may catalyze new changes in the pattern of global air transport. The pandemic will have greater impact on countries with severe outbreaks, such as the United States, Italy and Spain,” Lin said.
Less-competitive carriers will be easy pickings for the strong. Flybe, recently Europe’s largest regional airline, has collapsed into administration regulation, and some other airlines may be acquired or restructured, he added.
The International Air Transport Association said in its latest report that global airlines may burn through $61 billion of cash reserves in the second quarter, and post a quarterly net loss of $39 billion.
The analysis was made under a scenario in which severe travel restrictions will last for three months. In this case, passenger demand will fall by 38 percent and passenger revenue will drop by $252 billion this year compared to 2019.
Chinese airlines are not immune. The three State-owned carriers all said in their latest annual earnings reports that the severe challenges within the global aviation industry
The civil aviation industry in China will suffer losses for sure this year, and it is just a matter of how much it will lose. The outbreak may catalyze new changes in the pattern of global air transport. The pandemic will have greater impact on countries with severe outbreaks ...” Lin Zhijie, an industry analyst and a columnist at civil aviation website carnoc.com