The effect of COVID-19 has a deep impact on the airline industry as the pandemic already stalled several flights around the world. According to the International Air Transport Association (IATA), the global airline industry will lose US$252 billion in 2020. Many airlines cut up to 90 percent of their flight capacity to limit mobility in order to contain the spread of the virus.
In the United States, airline carriers such as Delta, American, United and Southwest, have announced plans to cut their international routes by as much as 80 percent to 90 percent over the next several months, and domestic capacity is now being lessened by 20 percent to 40 percent. However, some climate activists are pointing to the dramatic fall in carbon emissions due to the emptied skies. But the industry leaders are more concerned about to bounce back and are putting efforts to get back on track to address the losses.
In India, Corrective Action Preventive Action (CAPA), in late March, estimated that the country’s Airline industry could witness a loss of US$3.3 billion to US$3.6 billion if flight operations remained shut down till the end of June. As the April-June quarter is traditionally considered one of the stronger quarters of the current fiscal year for the Indian aviation industry, this now seems to face a sharp decline given the current nationwide lockdown to prevent the COVID-19 pandemic.
On the other hand, the number of Commercial flights globally has seen a severe turn down over the past month as more and more countries put restrictions on air travel in response to the pandemic. According to FlightRadar, a global flight tracking service, the number of commercial flights plummeted from over 100,000 till mid-March to less than 25,000 as on April 19, a deep fall of around 75 percent.
Sharp Decline in Numbers of Passengers
According to the Transportation Security Administration, the number of passengers has reduced compared to the pre-pandemic days at U.S. airports. On March 1, over two million people in the country were flying per day. A month later, fewer than 100,000 people are going through airport security daily. On May 17, the total number of passengers was 253,807, the highest number since March 24 (279,018), as per the TSA data.
Cut in Employee Headcounts
As the coronavirus outbreak has hit hard the airline industry, airline companies around the world are shifting to cut costs and even reducing employee counts. In the U.S., airline workers have been largely spared from the carnage that has pushed the country’s unemployment to record highs since the start of the pandemic. According to reports, nearly 750,000 pilots, flight attendants, baggage handlers, mechanics and others will soon be among the most at-risk for losing their jobs.
Already, airline companies have requested their workers to take voluntary unpaid or low-paid leaves. Around 100,000 workers at the four largest carriers, American Airlines (AAL), United Airlines, Delta Air Lines (DAL) and Southwest Airlines, have done so. On May 14, as Delta Airlines announced the retirement of its Boeing 777 fleet, CEO Ed Bastian noted: “Our principal financial goal for 2020 is to reduce our cash burn to zero by the end of the year, which will mean, for the next two to three years, a smaller network, fleet and operation in response to substantially reduced customer demand.”
Meanwhile, the Canadian flag carrier Air Canada also plans to cut its workforce by at least half. According to a report, about 50 to 60 percent of the company’s 38,000 employees will be laid off. Air Canada is currently flying at around 5 percent of the capacity it flew last year and expecting to ramp up to 25 percent later in the year if government-imposed travel restrictions are relieved.
Furthermore, in the U.S., on April 14 major airlines and the Treasury Department made an agreement over up to US$25 billion in payroll assistance, part of the US$50 billion coronavirus bailout for the airline industry. This bailout package covers two provisions for aid to the airline industry, bifurcate into two US$25 billion funds for passenger airlines.