IEEE Future Directions
Related Articles
Today I am flying back home from Costa Rica. It is the first transatlantic flight after 2 years. I guess a few other people have experienced the same disruption of their flying habits. In my case from one transoceanic flight per month to one every 2 years.
Surely annoying for me (and likewise for most other people) but an economic tragedy for airlines and the whole aviation business (airports, catering, travel agencies…). As I waited for the flight I happened to read the recent McKinsey report on the status of aviation worldwide and their numbers provide substance to my feelings.
What I did not perceive was that the aviation crises has begun well before the pandemic, actually they developed through the last decade as shown in the graphic. Of the five global areas considered (Africa-Middle East, Asia Pacific, Europe, Latin America and North America) only one, North America, has seen an increasing value in the aviation sector (the US in particular).
In the period 2012-2019 out of 122 airlines considered in the report 28 increased their value, 94 decreased it. Of the top 10 airlines that created value in that period 5 were US based, 1 Canadian and 2 were low cost airlines (Ryanair and EasyJet). For the record the remaining 2 are British Airways and Japan Airlines.
Here, I guess, lies one of the reason of the market value destruction. The low cost carriers (and in Asia there were a few rising, like Air Asia, Bangkok Air, …) have captured a significant portion of the market (in Europe Ryanair carried 72.4 million passengers, Lufthansa was second with 46.9 million, out-perfomed by over 25 million passengers). In the US there are basically no “low cost” carriers, at least to the level we are seeing in Europe and Asia (and partly in Latin America), hence the better performance of the established carriers.
Low cost companies have embraced the digital “evolution” everything takes place in the cyberspace with the exception of the physical transportation. The long established carriers are now chasing the underdogs.
In the middle of this ongoing crises the pandemic struck and as shown in the graphic the impact has been devastating with losses all across the globe.
According to the McKinsey report, the worldwide aviation value has plummeted to the level it had 16 years ago, one year of pandemic has moved the clock back 16 years.
Now the situation is (slowly) changing, although it might take 2-3 years to go back to the pre-pandemic levels. Some companies are betting on a prompt recovery, like United that just announced 30 new or resumed trans-atlantic flights per week starting May. Others are still cautious.
