Aviation industry recovery underway despite business travel challenges
The recovery of the “resilient” global airline industry from the Covid-19 crisis is “now underway in much of the world”, but business travel “remains more problematic” than leisure travel and some aircraft cabins will have to be reconfigured accordingly.
That’s according to an aviation outlook report by accounting giant PwC. It finds that new fleet orders and deliveries will increase this year and at the end of 2022 near pre-Covid levels, although the combination of a strong US dollar, rising interest rates, inflation and rising oil prices will create headwinds for airlines and aircraft lessors. .
Globally, air passenger numbers rebounded around 18% in 2021 from 2020 levels and were still barely half of pre-Covid numbers, the report noted.
“It is clear that when Covid-19 passes, passenger response will be immediate and strong – people will seek to return to the skies as soon as they are physically and legally able and feel safe to do so,” said Dick Forsberg, PwC Ireland’s. senior aviation finance consultant, who wrote the report.
However, passenger numbers may not fully recover to pre-Covid levels until 2025 or later.
“The majority of the traffic recovery seen to date is for leisure travel, including vacations and visiting friends and relatives,” Forsberg said.
“Resuming business travel remains more problematic, particularly for high-yield long-haul passengers, where full-service network carriers are often dependent on their premium fares and have invested heavily in business-class cabins.”
Airlines will need to change their product offerings to reflect this, with expanded premium economy cabins replacing some business class capacity to accommodate price-conscious business travellers, the report concludes.
Despite the widespread and prolonged strandings caused by the pandemic, the airline industry’s survival rate has been higher than initially expected, with “only” 64 airline bankruptcies, including 30 which ceased operations, 15 currently in progress. restructuring and 19 that have already emerged. corporate restructuring processes.
The fallout would have been far greater had it not been for the “extraordinary” levels of government support made available to airlines since the start of the pandemic. This represents more than 200 billion dollars (176 billion euros) in total.
However, the exceptional levels of debt assumed by airlines will continue to present challenges that could yet trigger defaults or need to be resolved through restructuring, the PwC report warns.
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