The unprecedented decline in air travel due to the coronavirus pandemic (COVID-19) will not fully recover for at least three years. This according to S&P Global Ratings which says the aviation industry faces a long, slow climb to recovery.
The ongoing pandemic, which has infected some 5.8 million people worldwide, has forced lockdowns in numerous countries globally, and seen widespread restrictions implemented on travel.
As a result, the ratings agency says global air passenger numbers will drop by as much as 55 per cent this year when compared to 2019, much steeper than its initial estimation in March.
For context, the fall-off will be worse than what was experienced after the 9/11 terrorist attacks, the 2003 SARS pandemic and the 2008/2009 global financial crisis, it said.
“The path to air traffic recovery will depend not just on the pace of these border openings…and the economic burden resulting from the severity of the coronavirus pandemic.”– S&P Global Ratings
Notwithstanding, those figures will begin recovery but not surpass the levels seen before the virus outbreak for at least another three years, S&P said.
“Over the longer term, we believe that air travel will eventually return when current health and safety concerns have been meaningfully addressed by the industry and consumer confidence rebounds, supported by steady historical growth rates in air traffic of four per cent to five per cent per year,” shared S&P’s analysts.
Noting that the peak of the pandemic has seemingly passed in many nations, the agency said several governments are moving towards reopening borders but in a slow, selective manner.
“The path to air traffic recovery will depend not just on the pace of these border openings, but also on airline fleet capacity and route planning, passenger demand, and the economic burden resulting from the severity of the coronavirus pandemic,” it stated.
Even with economies and borders making plans to reopen, there will be a slow return to previous habits, particularly for those in business who have adopted to widespread work from home policies and having virtual meetings which could impact the business travel line that has proven lucrative for airlines.
S&P Global Ratings says there is a high degree of uncertainty about the rate of spread and the peak of the coronavirus, with the adopted containment measures pushing the world’s economy into recession; that said, its assumptions and estimates will be adjusted as the need arises.