The COVID-19 and its implications to both life and finances are not unknown to many. The coronavirus-induced disease came to wreak havoc on the lives of people all over the world and in Airlines sector too.
The more disturbing part is that despite knowing it is killing people and will continue doing so, we cannot do anything. The formidable human race is helpless.
The development of a vaccine is the only solution; otherwise, we will be stuck in our homes for a lifetime, quarantining and becoming frustrated.
Social distancing and lockdown have had a devastating effect on businesses and people’s income. However, there is one particular business that has suffered the most and will continue to do so for some time longer. And that is the aviation industry or as we commonly say it the airlines business.
The Prequel
If I asked you which transportation medium is the safest to travel, what would your answer be? The three choices to select from are roadways, waterways and airways.
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I am sure the majority would have chosen the air. Yes, travelling by air is the safest mode of travelling. The chances of an aeroplane meeting an accident or crash lending are almost negligible.
Apart from this, airways are also the fastest. The time taken to travel from London to Edinburgh by air and by road is very different. With the former being a small portion of the latter.
Perhaps that is why this industry is lucrative that it will astound you.
There are well over 40,000 flights that take off on an average day.
So, the number of passengers travelling through these flights would also be high. The count stands at 2.7 million.
Then there is the distance travelled. On any given day, about 30 million square miles are covered by the flights.
So, this means whenever you look up in the sky, there will be about 10,000 aeroplanes mingled with the clouds in the blue sky.
It suffices to say that the aviation personnel earn well enough, so well that even when they take up loans, they can quickly repay it without letting them turn into bad credit.
The Losses
In a time when the majority of the countries are implementing nationwide shutdown and staying at home has become a social norm, an industry that promotes travels is not going to fare very well.
The wheels of fortune took the most brutal turn for the airlines business. They landed on the colossal failure from the cloud of perpetual prosperity.
Less Income in Airlines sector
The International Air Transport Association made specific predictions about the losses that the aviation industry would have to endure in the pandemic.
- They predicted a revenue loss of around $30 billion in the end of February.
- By the first week of March, the losses were estimated to be between 63 to 113 billion USD.
- At the end of March, the estimation of losses doubled.
At present, many other, organisations have made predictions as well. These say that the aviation industry will end up losing over a trillion USD before the pandemic wanes.
Fewer Flights for Airlines sector
With over 80% of flights being cancelled due to the COVID-19, the numbers do not come as a shock in the slightest.
Social distancing cannot be practised when you are sitting less than a foot apart from the other passenger.
Only the private jets are operational at present, making transatlantic visits for business people, who can afford to practise social distancing in the air as well.
Fewer Employees and Aircrafts
With no income and a saddening passenger count, the airline companies cannot afford to keep both their business and employees at the same time.
- Companies like Air Canada have laid-off 60% of its staff. This number is in tens of thousands.
- Air Zimbabwe had to ask its entire workforce to go on an unpaid leave of absence.
- American Airlines and Alaska Airlines have had to retire many of their aircraft to compensate for the losses.
- A renowned Latin airline, named Avianca, had to declare bankruptcy because the losses were insurmountable.
The situation is more or less similar to almost every airline’s company.
Higher Cancellations in Airlines
On top of these losses, the airlines also have to reimburse the passengers for the cancelled flights.
In America amongst many other nations, the airlines cannot just give a voucher for the ticket to be used later; the actual amount of the tickets has to be given to the passengers.
This is another financial setback for the aviation industry. Any hope of retaining the cash to sail through the pandemic is shot.
The Hope
With many countries thinking about restarting the airways, at least on the domestic front, the aviation industry can feel a little less panicked.
The passenger count is going to be low, keeping in line with the social distancing norms. Along with this the percentage of flights in the air will also be on the lower side.
However, the opportunity of getting back on their feet will be enough to ignore these details. Something is better than nothing, right?
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