SEOUL – The global airline industry is reeling under Covid-19’s ongoing assault, and does not expect a return to pre-pandemic traffic levels for three years, according to an industry group.
“Essentially, we expect the sector to recover to 2019 levels in 2024,” said Conrad Clifford, regional vice president of Asia-Pacific for the International Air Transport Association, or IATA.
Even that distant target date is conditional: It is based on successful international vaccine rollouts by mid-2021, he said.
The pandemic, “is the largest shock to commercial air travel since World War II,” added Mitchell Fox, senior director for strategy at the International Coordinating Council of Aerospace Industries Associations, or ICCAIA.
Before any recovery can take place, sectoral damage looks set to be colossal.
“In the second half of this year, airlines will burn through US$77 billion dollars just sitting on the ground,” warned Clifford. “In Asia-Pacific there has been a 90% reduction in international traffic and a more than 50% reduction in domestic markets.”
To survive, airlines are cutting costs by mothballing fleets, laying off staff, selling assets including real estate and air frames and returning aircraft to leasers. They are also refocusing away from passengers to cargo.
These efforts, however, may not be enough.
Clifford warned that airlines need industry-specific financial support “quickly” because many lack the financial reserves necessary to tide them over until vaccines – hopefully – allow the sector to revive.
Both executives were speaking at an international webinar organized by South Korea’s Ministry of Land Infrastructure and Transportation, or MOLIT, which bought together some of the leading voices in the global industry on Tuesday.
Woe and frustration were common themes.
The industry has de-risked both air travel and procedures at airports, to a greater degree than virtually any other environment. Yet mandatory quarantines for arriving passengers – what one speaker called “a show-stopper for travelers” – continue to stifle international mobility.
The sector desperately needs a globally-acceptable passport-style solution that can certify tests – and subsequently vaccinations – for travelers, airlines and border officials. IATA is set to trial a digital solution before the end of the year and launch it in the first quarter of 2021.
But with the pandemic resurgent across much of the globe, its take-up by risk-averse governments is far from guaranteed.
Blood red clouds
Globally, the sector is a disaster zone and Asia has been particularly hard hit, noted Vinoop Goel, Asia-Pacific director of Airports and External Relations at IATA.
“It is lagging other regions and international air traffic today is just 5-10% of what it used to be,” he said. As for the much-discussed bilateral “air corridors” or “travel-business travel bubbles” in the region, “there are not many examples,” he said. “You can count them on your hands.”
Meanwhile, aircraft construction has come to an unprecedented near-halt across the world.
“From the manufacturing standpoint, we have experienced several months in which a couple of major manufacturers have had no deliveries – that is unheard of,” said Fox of ICCAIA. “And we don’t see that improving in the near future.”
So far, 175,000 direct jobs in aircraft manufacturing have been lost, Fox said. And that is just the tip of a monstrous iceberg. “We can only imagine the impact on the tourism industry in all countries,” he added.
To look at the damage the pandemic is wreaking on the sector in a single nation, take South Korea, the country which hosted the webinar. A G12 OECD member, the country usually has a robust travel, leisure and tourism sector, both ingoing and outbound.
But since February 19, when the first infected person set foot on Korean soil, more than 90% of flights have been grounded, 140 aircraft nationwide are in storage and 50% of staff are on indefinite leave, said Son Gyung-hwa Son, deputy director of the Aviation Safety Policy and Licensing Division at MOLIT.
At Incheon International Airport, the country’s premier air gateway, demand has fallen by 95% amid the pandemic, said Cho Woo-ho, executive director of marketing at IIA Corporation.
Offloading passengers, onloading cargo
The national flag carrier has seen a 92% fall in daily flights and 96% drop in passenger numbers, said Chung Jin-woon, deputy general manager of cargo sales and marketing at Korean Air.
Forced to look beyond passengers, airlines have sought new or upgraded revenue streams.
For instance, Korean Air has seen a 77% increase in cargo carriage. On aircraft, it has utilized both belly cargo space and overhead lockers, and more recently has removed seating from part of its fleet, replacing it with cabin floor loading decks.
The new cargo demand is a result of both new products – such as personal protective equipment (PPE) and test kits, many of which are manufactured in Korea – and an uptick in e-commerce during lockdowns, which has led to a growth in products being shipped by air, Chung said.
As a result of this demand, Korea Air, which operated just 35 flights in March, flew 650 in November.
In the year ahead, the massive global deployment of vaccines represents another opportunity for the industry. And airlines have seen one silver lining this year: The price of aviation fuel has dropped 77% compared to 2019.
Even so, “it has not been easy” Chung admitted, citing his company’s fall in operating profits for the first three quarters.
Still, as least Korean Air is a going concern – unlike cross-town rival Asiana, a long-ailing business for which Covid-19 has been a death blow. Due to the airline’s woes, Korean Air last month began the process of acquiring the carrier.
Air travel itself is safer than virtually any other environment, multiple speakers insisted.
Airports across the world have been upgrading the safety of their facilities using multiple methodologies and technologies, said Hassan Shahidi, president and CEO of the Flight Safety Foundation.
These include contactless check-ins, widespread use of plexi-glass screens and widespread availability of hand sanitizers, requirements for passengers to wear face coverings, alterations to physical spaces to maximize distancing, and the deployment of new sanitizing technologies such as UV lights.
Aboard aircraft, flight attendants and crews are required to wear gloves and masks, in-flight services have been reduced or eliminated, more frequent cabin disinfections have been implemented and special training instituted for the cleaners, Shahidi noted.
Airplanes themselves provide almost ideal transport in an airborne pandemic.
“Cabin air quality changes every two to three minutes; in hospitals it is every ten minutes,” said Shahidi, citing findings from computational flow dynamics. “Filters are 99.9% effective in removing viruses and bacteria and airflow in passenger cabins is less conducive to droplet spread.”
“Safety measures that have been applied appear to be highly effective and this is evidenced by low incidences of inflight transmission of 50 cases among 1.2 billion passengers who have travelled,” added IATA’s Clifford. “The cabin environment is safer than schools or offices.”
Closed skies
While some speakers blamed passenger fear for the sector’s predicament, the consensus among multiple speakers, was that government restrictions were the core issue.
“Measures taken by many states – such as 14-day quarantines – have had a profound effect and bought air travel almost to zero,” said Fox. “It puts a barrier up to business travel and discretionary travel.”
Border closures and quarantines have been mandated by governments that – understandably – seek to shield populaces from incoming infections. But there is no internationally accepted best practice.
“We are looking for as much harmonization as possible from different states,” said Clifford. “It is obvious that independent states have different requirements and have to retain sovereign rights… [but] the big issue is the approach to quarantine.”
Kwon Soon-man, a professor of Health Economics at Seoul National University, suggested that 14-day quarantines may be excessive, with research indicating a week or 10 days is sufficient.
While global hopes are pinned on vaccines, IATA’s Goel said they will take up to 22 months to implement across the world.
IATA – which is calling on governments to re-open borders – does not expect vaccines to get widespread distribution “until the second half of 2021, and countries that have not been able to pre-purchase will be further back in the queue,” Clifford noted.
Due to this, it is essential to build cross-border consensus on pre-travel testing regimes. “Waiting for a vaccine is not going to work,” he said. “We have to have testing and vaccines together.”
“Air travel is safe, quarantines are a costly solution and can impact lives and families and business,” added Goel. “Systematic testing can replace quarantines.”
Kwon called for a re-evaluation of testing systems.
“PCR testing is important from a medical perspective, but for aviation, we should look at alternative tests,” he said. “In a clinical setting, PCR may be better to check contagiousness but from the perspectives of cost and ease, we should consider Rapid Antigen tests at airports.”
Polymerise Chain Reaction (PCR) tests are considered a gold-standard test, but requires intensive lab testing, while Rapid Antigen tests, though less sensitive, deliver results in just 15 minutes, according to Nature.
But even if a global agreement on testing protocols is reached, that is just the start. A standardized global system enabling multilateral recognition of tests, and the provision of standardized certification verifying tests, to be carried by passengers, would need to be created.
This kind of international system, “is essential to prevent a complex patchwork of 190 [national] solutions to one problem,” Clifford said.
Much time at the Webinar was spent discussing the multiple studies, metrics, guidances and analytical dashboards that various industry associations have produced. But – lacking any influence over health policy – the bodies have been reduced to making recommendations and lobbying authorities.
Their efforts are bedeviled by the bewildering complexity of stakeholders tied into the issue. These include the travel industry, the traveling public, and myriad players, often with competing interests – customs, health and transport officials – in all national governments.
Yet the industry’s Holy Grail may be in sight.
Ready for relaunch
IATA, on November 23, announced that it is “in the final development phase of the IATA Travel Pass, a digital health pass that will support the safe reopening of borders.”
This pass is an open-source, information-flow infrastructure tool.
It potentially provides governments with means to verify the authenticity of tests and the identity of those presenting test certificates. It offers airlines the ability to provide accurate information to their passengers on test requirements and verify that passengers meet requirements for travel.
Likewise, labs and hospitals will have the means to issue digital certificates to passengers. And travelers will have information on test requirements, where they can get tested and the means to convey test information to airlines and border authorities.
The pass it set to undergo pilot tests by the end of the year. IATA hopes to roll it out globally in the first quarter of 2021.
It is unclear whether states are open to accepting the pass. Webinar speakers urged governments to leverage the pass and follow WHO recommendations to increase travel corridors and ease or raise quarantines for incoming travelers.
“The WHO does not recommend quarantines for asymptomatic travelers” Goel noted. “In line with WHO guidances that air travel has been de–risked, border openings require a trade-off between economics and risk. In life there is no zero risk.”
Looking ahead, IATA’s pass is designed to incorporate not just test data, but also vaccination data as it becomes available.
But vaccination programs present yet further complexities. Currently, and in the months to come, multiple vaccines from multiple manufacturers will be hitting multiple markets.
All have different levels of efficiency, proven by different studies and certified (or not) by different national health and pharmaceutical authorities. And they offer different periods of protection and different timelines for booster shots.
Another factor for governments to weigh when considering bilateral air transport corridors is the constantly shifting risk differentials between countries.
There is a 140,000-times difference in prevalence between the countries that are least and most impacted by Covid-19, said Lee Hyuk-min, a professor in the department of Laboratory Medicine at Yonsei University Hospital.
Fear of flying
Governments, meanwhile, are understandably prioritizing public safety.
“We need to talk to ministers and we are talking to quarantine authorities, but the recent spike makes it difficult to develop the discussion,” admitted Hwang Sung-pil, deputy director of the International Air Transport Division of MOLIT.
And however much the industry may talk up the safety of air travel, it was through international travel that the virus spread.
“Nobody is safe until everyone is safe under this global economy and society,” said Kwon. “No country is safe until every country is safe.”
Still, Kwon argued that the risks Covid-19 presents to public health need to be realistically re-calibrated.
“As a society or as a government, we have [two] goals – saving lives and saving livelihoods,” he said. “It is not feasible to have a zero-risk society, as a society we have to agree on ways to accept risk.”
Yet, when it comes to risk perception, the airline industry has a unique problem that long predates Covid-19: A prevalent global belief that elevates the perils of flying over all other forms of transport.
“When there is an accident on an aircraft we have to remind people how safe aircraft are,” sighed Javier Vicedo, China and Northeast Asia representative of the European Union Aviation Safety Agency. “There is a narrative that an aircraft is more dangerous than anything else. It is a narrative we have to live with.”