The aviation industry’s recovery following the worldwide coronavirus (COVID-19) outbreak will be long and slow, according to S&P Global Ratings’ latest report.
Lower footfall at airports across the world, due to the lockdowns and travel restrictions, will lead to substantially lower revenues, with the recovery once they re-open likely to be slow.
The credit ratings agency estimates that global passenger numbers will drop by between 50-55% this year, a far steeper decline than anticipated in March. It added that passenger numbers are expected to stay below pre-pandemic levels until as late as 2023.
S&P Global Ratings explained that the current airline industry conditions have been substantially weakened by the pandemic, which poses serious challenges to the industry and threatens operators’ credit quality.
The credit ratings company’s report also noted that the pandemic’s ultimate impact on its global airline ratings will depend on the duration and severity of the crisis. The type and severity of measures airlines and governments will take to mitigate the pandemic’s side effects will also affect how far airlines suffer.
Elhamy El-Zayat, former chairperson of the Egyptian Tourism Federation (ETF), told Daily News Egypt that the outbreak has negatively impacted worldwide tourism and aviation sectors.
He anticipates that most of the major aviation companies worldwide will shrink in size or merge with other major airlines, while smaller airlines will go bankrupt.
El-Zayat said that business travel has, until now, been the largest and most profitable segment in the airline industry. However, as greater numbers of businesses realise the effectiveness of virtual meetings and telecommunications, many airlines will now have to adapt to greater numbers deciding not to travel. As a result, aviation companies will decrease their volume due to the decreased numbers of passengers.
Although he added that it will take time for people to feel safe travelling again, El-Zayat noted that tourism will return to normal by 2023, based on updates coming in from around the world.