Covid-19 and the Global Aviation Community

COVID-19 AND THE GLOBAL AVIATION COMMUNITY

BY TRAVIS KUHN

VP OF MARKET INTELLIGENCE

By now we have all discovered the harsh reality that no one, or industry, is immune to the effects that COVID-19 has had on the world. Perhaps no industry has faced these daunting challenges quite like the ones currently being realized in the travel industry, specifically in the global aviation community. The aviation industry finished 2019 with one of the strongest performance years on record. Profits were soaring at airlines, business aircraft movements were at levels not seen since before the Great Recession and the industry was worried about the impending pilot shortage along with how quickly Boeing would be able to get the Max back in the air, due to increasing passenger demand. Then came COVID-19, a virus that was rapidly spreading across the world and the only known way to slow its spread was to limit travel. With the flip of a switch on March 16th, passenger numbers in North America dropped as much as 95%, airlines were closing, there was no longer a pilot shortage and the airlines were comfortable with Boeing taking their time on the Max project as passenger demand evaporated overnight. A stark contrast from exactly 1 year ago.

In April 2019, the major North American carriers recorded a formidable 538,206 departures for the month. That represents an average of 17,940 departures per day. In a normal week the airline world typically sees a spike in activity on Monday morning, as the business world heads to work, and Thursday, as the business world returns home and people travel for long weekend vacations. The weekends will typically see a drop in passenger movements and then the cycle will repeat itself on Monday morning. That weekly pattern has remained for both business and commercial aviation during COVID-19, but the number of flights has dropped exponentially. In April 2020 the major North American carriers recorded 134,077 departures for the entire month. That represents a daily average of 4,496 departures or a year over year drop of 75%. Reductions of 10% – 20% would seem earth-shattering in a normal environment. Even the robust business aviation market has struggled in both the US & Europe. For an industry that normally records 260,000 North American departures a month, the 74,000 that were recorded in April was nothing short of shocking. Both the US & Europe saw business aviation activity drop 71% year over year during April.

This dramatic drop in activity that was a result of government orders and extreme social distancing has turned one of the world’s busiest airports into a ghost town. In April 2019 Atlanta Georgia, the global home of Delta Air Lines, recorded 29,433 major airline departures for the month. The COVID-19 environment caused activity at Atlanta to drop 75% year over year in April 2020 to just 7,375 departures. Fort Lauderdale was the top destination from Atlanta in April 2019, with 769 flights recorded for the month, but in 2020 that number was reduced by 75% to just 181 departures. In fact, a review of the top 25 destinations out of Atlanta revealed that Newark and New York LaGuardia recorded the largest percentage change in year over year activity, down 88% & 80% respectively.

While the numbers have not been good over the last few months there have been signs of improvement across the aviation community. The TSA has continued to post daily passenger traffic numbers on their website, comparing them to the pre-COVID-19 environment, and those numbers have been steadily increasing over the last month. Additionally, business aircraft activity in North America is expected to make up 1/3 of the total losses in flight activity during May alone. It is further expected that June will see a similar increase. But do not expect the airlines to follow suit, just yet. While business aviation will provide a good indication of where the industry is going, the airlines operate under a completely different business model. Business aviation is agile and used to responding to requests within days or even hours, so restarting is much faster for that side of the industry. The airlines, on the other hand, typically lag 2-3 months due to the challenges of restarting a route (positioning crews, aircraft, marketing, selling tickets, ground personnel needed at the airport) so, while the industry is improving, it will take a few months for this to show in the airline industry.

The bottom line, we live in a global, connected world and air travel is a vital part of our everyday life. It has faced unforeseen challenges before and COVID-19 will prove to be no different, but part of the rebuilding will come from the advantages that air travel provides. Air travel will rebound, although it might take 12-18 months, but it will be back and stronger than ever.

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