It is not a great diagnosis for the three months ahead. Despite the first shoots of spring in the northern hemisphere, most countries have a lot more on their mind. COVID-19 continues its global spread, reaching more countries, and infecting at an alarming rate at those where it is already widely active. International borders have gone up, and citizens locked-down as the killer virus takes hold.
Fitch Ratings, one of the big three credit rating agency described last week that COVID-19 presents “unknown and unique risks for the aviation industry” compared with previously observed pandemics and exogenous shocks. It predicts an increase in airline bankruptcies, particularly among smaller and financially weaker airlines that are more sensitive to exogenous shocks and market impacts such as oil price and currency volatility.
As we enter April, we are unlikely to say many airlines outside of mainland China still flying. Announcements over the past couple of days from easyJet, Emirates Airline and Ryanair highlight just how much demand has fallen with what limited demand that is still available mainly the repatriation of citizens to their homeland. How many of these airlines will return to the air when things return to ‘normal’ is the million dollar question.
The airline shutdowns are grabbing the attention but no-one travelling has significant effects throughout the travel and tourism industry. A staggering one million jobs are being lost every day in the sector due to the sweeping effect of the coronavirus pandemic, according to the World Travel & Tourism Council (WTTC).
According to WTTC’s latest research, the industry contributes to 10.4% of Global GDP, is directly responsible for generating one in 10 of the world’s jobs and, for eight successive years, has outpaced the growth of the global economy. It warns that up to 50 million jobs throughout the world are at immediate risk, with up to 320 million jobs facing the impact of the dramatic loss of business.
Let’s not forget we are dealing with a global health disaster, a deadly pandemic that has already infected more than 335,000 people across the world, killing almost 15,000, a figure that hadn’t surpassed 5,000 less than two weeks ago. The death toll in Italy has now surpassed China, the number of cases are growing rapidly in Spain and Germany and USA reported over 8,000 new cases on 22-Mar-2020.
WTTC says the vast closure of hotels, suspension of the majority of international and domestic airline flights, cessation of cruise lines and growing global travel bans are having a catastrophic ‘domino effect’ hitting huge numbers of suppliers worldwide. “The domino effect of COVID-19 is right now having a massive impact, wiping out an entire economic sector,” says WTTC’s president & CEO, Gloria Guevara.
Growing job losses are affecting every level of the industry and are gathering pace, according to WTTC, as countries go into lockdown to tackle the virus and that small- and medium-sized businesses at every level, such as tour operators, travel agents and sole-traders, are especially vulnerable.
“While the priority for governments is to keep people safe, this global health catastrophe means a million people a day in the travel and tourism industry alone are losing their jobs and facing potential ruin due to the disastrous impact of the coronavirus pandemic,” says Ms Guevara.
She explains that businesses large and small are being forced to “rip up their three-year plans and focus on a three-month fight for survival” on a daily basis. “It is heartbreaking that the livelihoods of millions of people who have dedicated their lives to the sector are being decimated; from waiters to taxi drivers, guides to chefs and caterers, pilots to cleaners,” she adds.
As the pandemic escalates this situation is only likely to deteriorate. On a positive note, some governments have been quick to respond with promises of help, but as lockdowns become longer will they be able to bailout the industry long-term?
Nobody saw COVID-19 coming. Nobody knows when it leave, and there are suggestions it could become an annual issue. One bright spark though is that while China is now seeing another rise in cases – due to the return of citizens from overseas, rather than its own domestic spread – Wuhan, where this story began, is loosening a two-month lockdown by gradually resuming public transportation and allowing healthy people to resume work. As I now enter my second week in self-isolation, I would like to focus on this positive for now!
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The impact on airlines of the recent COVID-19 coronavirus outbreak, which began in China but has spread around the world, continues to have a devastating effect on the aviation and supporting industries. In a new essential daily update, CAPA – Centre for Aviation is curating intelligence from the World Health Organisation (WHO) and myriad industry sources available via its CAPA Membership news and data service. Its mission is to help cut through the noise and provide a useful daily snapshot of the COVID-19 outbreak evolution, together with key industry developments.