According to the least downbeat scenario presented by IATA, Covid-19 will set the aviation sector back 252 billion USD, a loss that does not take into account future-lost earnings related to the interruption of the supply chain [4], the closure of airports, the cessation of activities of aircraft manufacturers, companies specialized in aircraft maintenance, repair and overhaul (MRO).
For instance, Air France-KLM has reported 1.8 billion EUR in net loss in the first three months of 2020.
The Association of African Airlines (AFRAA), on its part, has reported 8.1 billion USD in future-lost earning since the borders were shut, from mid-March to the end of May 2020.
Covid-19: Immediate impact on air traffic from mid-March to late May 2020
| Regions | Transportation volume in decline | Estimated potential losses in billions USD |
|---|---|---|
Asia-Pacific | -37% | 88 |
North America | -27% | 50 |
Europe | -46% | 76 |
Middle East | -39% | 19 |
Africa | -32% | 4 |
South America | -41% | 15 |
| Total of the market | -38% | 252 |
Evolution of passenger transport worldwide
Global passenger traffic has sustained an unprecedented decline in the history of aviation. This decrease should be between 35 and 65% for the year 2020.
Read also | Impact of Covid-19 on the aviation sector [5]
Air traffic and Covid-19: preventive measures and additional costs
The resumption of domestic and international flights is coupled with new preventive measures designed to stem the spread of Covid-19 inside the planes. These measures pertain in particular to the reduction in the number of passengers and compliance with the social distancing protocol imposed by the authorities on board the aircraft. All of the preventive measures entail additional costs that increase operational costs and losses sustained by the aviation sector.
In an effort to reassure travellers and avoid a new wave of contamination, airlines will have to reduce the number of seats offered worldwide from 32% to 59% as soon as flights are resumed.
Estimated impact of Covid-19 on air traffic for the entire year 2020
| Decline in the number of seats | Decline in the number of passengers (in millions) | Estimated losses (in billions USD) |
|---|---|---|
| Between 32% and 59% | Between 1 825 and 3 208 | Between 238 and 418 |
Source : ICAO Air Transport Reporting
This reduction in capacity translates for airlines into a drop from 1 825 to 3 208 million passengers and from 238 to 418 billion USD in revenue losses.
The actual impact of Covid-19 actually depends on several factors such as the duration and extent of the pandemic, plans for de-containment and the level of passenger confidence in the airlines.
Other constraining factors can also affect the sector and lower its profitability, some of which are particularly dreaded like:
- the rise in air ticket prices from 50 to 100%,
- the reduced amount of cabin baggage,
- the reduction of aircraft capacities,
- the application of preventive measures to disinfect the aircrafts; special cleaning processes, more efficient air filters, etc.,
- the decline in the number of business trips,
- decreasing demand over the next three years.
Read also | Impact of the Coronavirus on aviation insurance [6]