Research led by the UK’s Cranfield University has found that the Covid 19 pandemic will lead to a smaller, more consolidated air transport industry in the future. The study—involving a series of interviews with senior aviation industry executives along with analysis of flight and air freight data—provides an early assessment of the medium- and long-term effects of Covid 19 on both passenger and cargo traffic. Interviewees expressed concern about the possible differences in state aid and how those variations could affect competitive balance in a post-Covid environment.
The executives largely agreed that Covid will most likely affect full-service network carriers the most because the recovery in international markets will prove slower than in domestic markets. Several also identified the potential entry of new airlines in international carriers’ home hub markets as a threat.
Meanwhile, interviewees identified regional airlines as possible short-term winners during the recovery period as they could potentially help full-service carriers adjust feed capacity. They also expect low-cost carriers to concentrate their efforts in primary markets and possibly enter hub airports while reducing frequencies at the route level. As a result, regional and secondary airports will likely suffer as capacity opens in larger markets, attracting airlines and enabling larger hub airports to reinforce their positions.
The executives also cited concern about the recovery of business travel, mainly due to the cancellation of meetings, incentives, conferencing and exhibitions events, and the uneven lift of travel bans. Meanwhile, many said they expect a faster recuperation of the leisure passenger segment; however, reduced disposable incomes would curtail propensity to fly and require significant support, such as route subsidies. They also identified fear and health concerns as more of a concern among leisure travelers than among business travelers.
Finally, all the interviewees believed that authorities would impose new health screening controls at airports, translating into higher costs for those facilities and passengers alike.
“We focused on identifying aspects that can structurally redefine the aviation industry in the medium and long term for both passenger and cargo traffic, particularly around supply and demand, traffic resilience, passenger behavior, health regulations, and business ethics,” said Cranfield University senior lecturer Pere Suau-Sanchez. “Understanding these structural elements in an integrated way can provide more confidence in efforts to predict the future context. As the views of senior stakeholders might change as the crisis evolves, a record of their early assessments also represents a valuable reference for future analysis.”
Cranfield conducted interviews with 16 managers from across the airline and airport sectors (including major, low-cost and regional carriers, large hub, medium-size and regional airports, a pilots’ union, and an aviation insurance broker) between March 19 and April 17. Researchers also analyzed global flight supply and air freight data—including origin and destination airport, time of departure and arrival, number of seats supplied, aircraft type, and day of operation—for the first four months of 2020.