Video of the week – As travel restrictions bring the barriers back up, will we ever see a level playing field for international air transportation?

17 March, 2020

It is a very tough time for us all as many are pushed into voluntary or involuntary isolation across the world. Technology will certainly help us to remain in communication, even if we are trapped in our home cocoons. But, what we have learnt already in responses to the dangerous threat of COVID-19 is that while governments are grappling with the health challenges of the coronavirus, it is clear that there is little instinct to act cooperatively.

Messages have been mixed and frequently quite different. Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbours or trading partners. However, we are used to this within the travel and tourism sector with very varied entry policies and air access regulations.

This is a particular concern currently with the air transport sector in crisis. With many of the world’s airlines now flying a fraction of their planned schedule and some major operators already completely grounded – at least for the short-term currently – the outlook is not good.

How quickly things change. It was only a couple of years ago that we were talking about airlines having there best year ever. Even as we rolled across into the new decade there were major positives for 2020, albeit with a few manageable hurdles in the way. In a matter of weeks such optimism has been broken as the industry has been infected by the debilitating SARS-CoV-2 virus that causes the COVID-19 disease.

In fact, in a strongly worded report earlier this week, CAPA – Centre for Aviation warned that by the end of May-2020, “most airlines in the world will be bankrupt”. It called on “coordinated government and industry action” right now “if catastrophe is to be avoided”. As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably “already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” according to CAPA.

“Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full. Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon,” it explains.

Today, as we contest a world health war against the coronavirus, the government response has been fragmented – and is being resolved along national lines, with limited consultation. CAPA says that as things stand, the “likely tepid response to the airline crisis will equally be fragmented and nationally based” and will consist mostly of bailing out selected national airlines.

National self-interest over cooperation is an evolving threat for aviation. The fear is that, as a collapsed airline system is reconstituted, similar national self-interest will prevail. Just like the responses to COVID-19 this outlook has for a long time delivered a fragmented and largely unviable airline industry.

CAPA says that id this is the default position, emerging from the crisis will be like “entering a brutal battlefield, littered with casualties”. The aviation industry is about much more than airline health. It is crucial to global communications and trade.

While these worries are obvious, there is also the option that the post-coronavirus world could be a unique time for a new aviation beginning. The post-coronavirus chaos could alternatively offer a unique opportunity to reframe the foundations of the global airline industry. “Inevitably, once we exit this tunnel - as we will - the world will be a different place; aviation will be no exception. But there is no better place to begin government coordination than in the aviation sphere,” says CAPA.

LEARN MORE… As the COVID-19 outbreak was still in its infancy, Peter Harbison, chairman emeritus, CAPA – Centre for Aviation presented on (re)shaping the international aviation regulatory system in the 2020s. Here’s his presentation from the CAPA Qatar Aviation, Aeropolitical & Regulatory Summit in Doha in Feb-2020.