Most airlines are resigned to the next few months being flat at best in terms of international air travel demand amid widespread restrictions, quarantine requirements and rising coronavirus cases in many regions.
Impatient carriers will continue to burn through cash and resize operations, in the hope that next year will bring some better news. It seems highly likely that more bankruptcies are ahead, whatever the coming months bring.
But when this crisis reaches the 12-month mark around February/March 2021, are there any reasons to believe that things will look vastly better than they do today?
The cautious answer is: “Yes, they might, but there are no guarantees.”
Every optimistic forecast must be tempered by a recognition that the airline industry’s fortunes are inexorably linked to how quickly the virus is brought under control – a factor outside its control.
International air travel cannot enter a full recovery phase while the virus is as big a threat as it is today. Quite simply, most people won’t commit to crossing borders while it still comes with a genuine threat of catching Covid-19, rapidly changing travel restrictions and quarantine requirements, and consequently unpredictable flight schedules. Those factors make international travel impracticable and undesirable, even where it is possible.
That point stands despite commericial air travel itself likely being relatively safe – IATA claiming recently that a person had more chance of being hit by lightning than of catching coronavirus on a flight.
But within that context, there is still a reasonable chance that better news for airlines will be forthcoming in the next few months – particularly in terms of medical developments.
Important data on the final-stage trials of several vaccines should be available soon, and perhaps one or two candidates might already be in circulation come early 2021. Concurrently, progress could be made on treatments and the care of those infected with Covid-19. And come early next year, more of the world will have a better idea of what works and what doesn’t in terms of keeping case numbers low.
In the most optimistic scenarios, it may be further proven that immunity to Covid-19 is more prevalent than previously throught. For this reason, or others, the potency of the virus may wane as the months go by, even amid waves of new cases.
In terms of aviation-specific developments, more “travel bubbles” might open up, allowing pockets of international connectivity. Schemes such as the European Union’s traffic light system for tracking cases might make it easier for carriers to serve certain routes. And perhaps IATA and ACI World will get their way and a widespread pre-flight testing regime will have opened up more international markets.
In combination, those and other factors might put the airline industry on a much stronger footing come the northern hemisphere spring.
WHAT MIGHT FURTHER STALL DEMAND RETURN?
But there are also plenty of developments that could further delay the signficiant opening up of international markets well into next year, and perhaps beyond.
Many scientists point out that a vaccine will not be a “silver bullet” for this crisis. Any societal benefits from inoculation will take some time to be realised – with population-wide delivery taking months at best – and will be on a sliding scale of success that won’t be measurable overnight.
And that’s only if a viable vaccine is signed off by health regulatory authorities, of which there is no guarantee.
The consequences of more evidence of coronavirus reinfections are also potentially significant. More generally, learnings about the strength and longevity of immunity might be on the more negative side of expectations.
At the same time, better treatments for Covid-19 are only likely to bring incremental benefits, with the chances of a “cure” infinitesimally small.
Moreover, without significant medical breakthroughs and/or the virus retreating, a scenario exists where more governments tighten their borders next year as they look to other countries, such as New Zealand, which have seen success using such suppression strategies.
Indeed, the current “second waves” of the virus in several regions raise the possibility that such draconian measures might look attractive to more governments before too long.
The bleak economic picture – with millions of job lost worldwide and corporate travel demand severely depressed – must also be baked into the demand outlook, whatever progress the new year brings in other areas.
Ultimately, while cautious optimism about improving conditions next year is justified, pent-up demand for international flying going into 2021 is most likely to be converted into actual travel by a much improved health picture, underpinned by medical advancements.
Absent such developments, it is worth remembering that the initial wave of Covid-19 hit in the February-March timeframe – precisely the point in 2021 when some are hoping for a reprieve from the horrific market conditions seen this year.
Nothing should be taken for granted.
Courtesy of Lewis Harper of Flight Global