Future of Post-COVID19 Aviation and its Relationship with the Economy

In 2019, air travel was affordable for the average citizen, according to the International Air Transport Association – IATA (2020), air connectivity had doubled since 2001 and air travel cost less than half. The airline industry’s contribution to the world economy was USD 3.5 trillion annually, or 4.1% of global GDP, generating more than 87.7 million jobs.

However, in February 2020, as a result of COVID19, certain destinations and perimeter closures began to be restricted, mainly in the Asia-Pacific region, where the effects of the disease began, reducing demand by 41%, as well as, available seats by 28% (IATA, 2020).

Following the declaration of COVID-19 as a pandemic in March 2020, governments established increasingly restrictive measures aimed at curbing the spread of the virus. These necessary measures deepened the crisis and triggered an unprecedented impact on the global economy and, of course, on the airline industry.
IATA (2020) estimates that 2.7 million jobs were lost in the airline industry alone, but if the entire aviation industry and other related sectors, such as tourism, are taken into account, this figure rises to 25 million jobs lost due to the pandemic.

Effects of the pandemic on airports and commercial flights.

For the Airports Council International (ACI), the result of the coronavirus pandemic has been the worst reduction in the number of passengers in the history of the aviation industry; according to its report, world passenger traffic decreased by 94.4%. It also indicated that, for the first four months of 2020, global passenger traffic experienced an overall drop of 41.8%, with a rolling 12-month average, which at the end of April, stood at 11.3%. This is in line with IATA, which stated that “there were some early signs in April that it was the trough of the crisis when the global industry had bottomed out”.

Restrictions and fear were reducing global demand for flights, so airlines responded by removing capacity, eliminating frequencies and closing routes. International and domestic markets worldwide recorded declines of 98.9% and 90.7%, respectively. All major regional markets recorded declines of over 95% in passenger traffic, except Asia-Pacific, where the domestic segment began to show a fragile sign of recovery, registering a decline of 87.7%.

Domestic passenger markets were also severely affected by the ongoing crisis. North America, the world’s second largest domestic market, was hit hard with a loss of 95% of its traffic volume. In contrast, the start of a recovery in the Chinese domestic market, as well as in other countries such as Australia, helped Asia-Pacific to record the lowest, but still very significant decline of 81.0% in April 2020.

The pandemic has also vetoed numerous airport and air logistics infrastructure expansion plans, as projected passenger flows will not recover in the medium term. The aerospace industry sector, both for the repair and certification of aircraft, as well as for the construction of parts and new aircraft, has also been affected by the crisis, which has led to the cancellation of purchase orders for aircraft already under construction.

Effect of border closure on aviation and economy.

Border closures became a regular measure, consequently, the international travel market was more affected than the domestic one. Airlines with strong operations in larger and more connected domestic markets found their domestic routes a relief in the midst of the crisis.

The case of Latin America and the Caribbean is even more dramatic: the number of passengers carried in April fell by 96% in the region, even more than the global average (94.5%). By July 2020, this situation had caused the region’s main airlines to lose 69.1% of their market value (compared to a global average of 51.5%).

This situation has led the two largest airlines in the region, Avianca and LATAM, to initiate restructuring processes under Chapter 11 of the US Bankruptcy Law. The same happened to the largest Mexican airline, Aeromexico. In Ecuador, it has been decided to liquidate the company Tame, while airlines have closed operations of their subsidiaries in some countries, as in the case of Avianca in Peru and LATAM in Argentina (ECLAC, 2020).

The effects on the aeronautical industry, especially on the Brazilian manufacturer EMBRAER, have not been long in coming. Although the business aviation and defense segments, which represent an important part of EMBRAER’s business, have been less impacted by the pandemic, the company has reported net losses of USD 537 million in the first half of 2020 (ECLAC, 2020).

In the case of Mexico, which participates in the aerospace industry value chain, the effects have also been negative. However, the national industry sees possibilities of recovery in the medium term as a result of the T-MEC and the relocation of companies from Asia to the Americas as part of the strengthening of productive chains and those linked to aeronautical components (ECLAC, 2020).

Air cargo transport has also experienced a significant contraction, with an annual reduction of 15.2% in March 2020. This relatively less pronounced drop, compared to passenger transport, is due to a growing and urgent demand for essential products, such as medical supplies and foodstuffs.

With regard to the impact of the pandemic on transport, in the case of air transport, the first data for the second half of 2020 show the beginning of a recovery in some markets, mainly on domestic routes in China and the United States and Europe. International routes, however, have shown more time to recover, given the economic recession in each region, the continuity of travel restrictions, and particularly traveler confidence.

Overall, the current outlook for the industry is for a slow but gradual recovery, which we estimate will take only three years to restore to pre-pandemic levels. Furthermore, companies will enter this new phase with significantly higher levels of debt, with net airline debt reaching US$550 billion by the end of 2020.

In Latin America and the Caribbean, in turn, airlines face the real risk of ceasing operations or strengthening the alliance process (as LATAM and Azul have done), which could increase concentration and generate less competition, with negative effects on the final price and loss of connectivity with peripheral and island territories (Weikert, 2020).

Measures taken by private aviation to continue operating during the pandemic.

Private aviation has continued to operate during the COVID-19 pandemic; to this end, security measures have been implemented to avoid the risk of contagion in passengers. In fact, this type of service has been on the rise, as it offers travelers the ability to travel to the destination they need, without having to be exposed to the usual crowds of commercial flights.

Among others, the U.S. Center for Disease Control and Prevention (CDC) established at the end of January that the use of the airplane as a means of transportation has been on the rise. (CDC) established at the end of January that everyone over the age of two must have a negative COVID-19 test to enter the country, which included all travelers, whether foreign, resident or U.S. citizens. This measure was later adopted by a large number of countries, opening their borders for special flights, as well as for private flights.

Passengers, in general, are seeking the services of executive airlines in order to travel with a greater sense of security, even though commercial aviation has sought not to be a vector of COVID-19 contagion. In this sense, executive airlines have had to implement regulatory measures, where it has become necessary to standardize the protocol imposed by the authorities, to take care of the hygiene and health of both their customers and their own crews.

Most crews are tested weekly for COVID-19 and are equipped with masks and gloves, as are ramp and customer service personnel. Aircraft are sprayed daily and then re-sanitized after each flight.

Deep sanitization involves a special focus on cleaning surfaces and then disinfection. For this, they generally use an environmentally friendly chemical approved to kill viruses and germs that also leaves a long-lasting protective layer against new contamination. As well as the use of disposable covers for microphones, headphones and other personal items.

Private Flights, the industry that helped many companies and users to mobilize during the pandemic.

Private aviation has been an important link for the maintenance and reactivation of the productive chain during the pandemic, adding the emotional capital involved in other major events, such as the repatriation of passengers stranded miles away from their homes, or the transfer of humanitarian aid, such as medicines or vaccines.

The experience of South American Jets and North American Jets has been extensive in terms of the different services requested. In the transfer of people, individual requests were handled for those who had the resources to hire charter flights, as well as special repatriation flights, through special flights for the embassies of El Salvador and Argentina. To a lesser extent, but equally, there were requests for air ambulances to transport COVID-19 patients, since they were in cities with little access to medical care.

From the sports point of view, national, regional or world leagues continued their activities, so there were multiple requests for the transfer of entire sports teams. Such as the transfer of the players of the Peruvian national team for the Qatar World Cup qualifiers, or the transfer of the Argentine Athletics team for the Olympic qualifiers, whose commercial flight had been cancelled, and the influencer Santi Maratea raised the money to rent the aircraft and transport the athletes. Similarly, there were transfers of soccer players, who hired services individually to reach their sports concentrations or travel back to their homes.

As for the reactivation of industries and the economy, there were several important requirements for our companies South American Jets and North American Jets, in particular, the cargo service, with which the supply of key products was achieved to activate production chains, as well as the transfer of medicines. Other important requirements were for the transportation of personnel from some Argentine fishing companies to the coastal areas, thus restarting the activities of these industries.

New measures for the reopening of airports and borders.

The Airports Council International (ACI) has proposed economic measures to protect more than 6.1 million people working at airports around the world, a figure that represents 60% of all employment in the aviation sector and may also provide them with greater stability.

The decision by a large number of countries to open entry to all travelers who are fully vaccinated was welcomed as an excellent omen that the road to recovery for the airline industry has been found. However, there is still a need to standardize the cases of passengers who have not had access to the vaccine in their home countries. One possibility is that they could be vaccinated directly, upon arrival, in the countries that offer it. On the other hand, airports could have rapid test modules, which would allow them to verify negative results on the spot.

These measures would speed up the entry of travelers to various countries and allow traffic to stabilize, which is essential to ensure the sector’s recovery and reactivate the economy.

The airline industry is committed to helping the economic recovery.

The Spanish Association of Defense, Security, Aeronautics and Space Technology Companies (TEDAE. 2021) states that the crisis caused by the pandemic is not temporary, as the changes caused by the pandemic are forcing the industry to a new business model. Companies must adapt, not only to a significant reduction in the size of the market, but also to the profound changes brought about by teleworking, technological development and environmental sustainability, factors that will undoubtedly affect the way we travel.

However, the aviation industry must be seen as an essential sector for driving economic recovery, becoming a lever for the transformation of a new economic model.

International travel will be fundamental to help reverse the devastating economic impact that multiple government restrictions have had on the economy, especially on the travel and tourism industry. In this regard, it is important to promote new destinations in order to increase the diversification of the sector, as well as its social and environmental sustainability.

International marketing strategies should target groups that are more likely to travel in the first place, such as luxury and business travelers, who can more easily adopt physical distancing measures and tend to favor less crowded locations (ECLAC, 2020).

Governments in the region should intensify collaboration to keep cross-border transport networks as open as possible, paying special attention to facilitating transit for the manufacturing industry, in the movement of inputs. No less important in the education sector, in the restarting of activities in educational institutions, as well as in student exchanges.

Likewise, the entertainment and sports sector plays an important role in promoting social integration and economic development in different geographical, cultural and political contexts. It is a powerful tool for strengthening social ties and relationships, and for promoting the ideals of peace, fraternity, solidarity, tolerance and justice.

A promising future and great lessons learned.

Among the premises to guide the future of aviation are the creation of secure spaces, the virtualization of procedures to minimize transit times at airports and personalized services that improve the traveler’s onboard experience.
One of the industry’s priorities is to build a safe space for users in order to regain travelers’ confidence. Sanitary passports are a common global and standardized requirement and innovative cleaning techniques have been implemented, based on highly effective solutions such as ultraviolet (UV) light disinfection or ozone sterilization.

Airports are undergoing rapid evolution to adapt to passenger needs and technological developments in the industry. Capacity control continues to be used, in some cases through techniques such as people flow detection, space sensing and video control. In the near future, facial and retina recognition instead of ID cards and molecular body scanners will facilitate security checks and reduce boarding time.

Similarly, the oral antiviral drug for covid-19, Molnupiravir, developed by Merck, or Paxlovid, later announced by Pfizer, is a breakthrough. The pill attacks the enzyme used by the virus to replicate, this action would prevent its multiplication, keeping the viral load low and reducing the severity of the disease. Therefore, in the event of a positive result, or a proven exposure, the pill could be incorporated into the first aid protocols at air terminals, in order to prevent the disease from progressing to a more serious state.

The digitalization of procedures helps to simplify operations and provide a more complete service to users, from the moment they book their trip until they arrive at their destination. Online processing, virtualization of procedures and automation of processes have accelerated the flow of passengers at times of heavy congestion at airports and significantly improved the efficiency of operations.

The in-flight experience also involves personalized attention, ranging from the most general, such as the infrastructure that attenuates the noise generated during the journey, the aircraft entertainment systems, managed through smartphones. As well as the WIFI trend on board, with connection throughout the trip are some of the services that have already been implemented.

One of the major lessons learned in the aviation industry has been the adaptation and strengthening of the ability to respond to contagious diseases, both to curb the spread and to adjust the operability of the facilities.

Last but not least, a sustainable future with respect to the aviation industry’s emissions reduction agreement. So the commitment of industry professionals is firm: to resolve the industry’s difficulties in reducing and eliminating its CO2 emissions through ongoing innovations in design, propulsion, operational procedures and fuels to initiate carbon-neutral growth. The use of sustainable aviation fuels alone would enable the industry to achieve a considerable reduction in its emissions of over 50%.

Leaders in private aviation

South American Jets, for Latin America, and North American Jets, for the United States, have been bastions of private aviation during the COVID 19 pandemic, keeping the borders open for those who have had the imminent need to travel, either to return home or for business, boosting different industry sectors, such as manufacturing, sports and food.
We have considered all the measures that guarantee the physical integrity, health and protection of our users’ assets. We have the endorsement of the leader in aviation safety auditing Wyvern and we belong to the main business aviation associations in America, Europe (including the United Kingdom) and Asia. Such as the National Business Aviation Association (NBAA), the European Business Aviation Association (EBAA) and The Air Charter Association/UK (ACA). This has consolidated us as one of the largest private air operators in the region.

As a company, we have been focused on a first class service in Latin America. It has not been easy to create this path, this is due to our approach, which has been to accompany the user in every step of the flight, we are committed to our customers, who have gradually become our friends.

It is important to provide quality service, from the first contact, to offer different proposals so that the customer can handle different options, which allows him to make decisions that affect his flight in a positive way. Likewise, the perseverance of the entire team, which feels committed to offer a service, framed in the highest quality standards, on and off the runway.

This work methodology has allowed us to grow in a region that even under circumstances and social stereotypes have been overcome through service. This has been our mission, to maintain and improve the warmth, to achieve excellence in all our services.

You can learn more about us through our website www.southjets.com, as well as www.northjets.com for the United States and North America.

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