Airlines will struggle long after passengers feel safe to fly again
The Covid-19 pandemic has caused the worst financial crisis in the history of the airline industry. But when the health crisis is over, airlines' financial problems will probably continue for years. History has shown clearly that it takes a tremendous amount of time for passenger traffic to recover after a recession. Most recently, it took a whopping five years after Great Recession ended in 2009 for passenger traffic to recover, according to Philip Baggaley, the chief credit analyst for airlines at Standard & Poors. Even after the relatively mild 2000 recession caused by the bursting of the dot-com bubble, it took until 2004 for US air passenger traffic to again reach its pre-recession peak. "Recessions are tough for the industry. Airlines are dependent on economic growth," said Baggaley. Beyond the years it takes for overall air travel to recover after a recession, historically it takes even longer for a return of business travel, which is the most lucrative sector for airlines -- one most of them depend upon. That's one part of what makes this recession particularly chilling for airlines. On an overall scale the pandemic has caused widespread economic pain, with millions losing their jobs and burning through savings that they might otherwise have used for discretionary spending like vacations. But when it comes to that all-important business travel, the situation is arguably worse. Many companies have fewer employees on payrolls with a need to travel. Most will also be trying to recoup losses or pay down debt caused by the pandemic -- and trimming travel by skipping conferences and meeting with clients virtually is likely to be a cost-cutting measure. And, of course, there are many companies that have gone out of business altogether during the crisis.<br/>"Business travel typically falls farther and takes longer to recover," said Adam Sacks, president of Tourism Economics. Sacks thinks next year's travel will still be significantly affected by the pandemic itself. But he said he believes that in "2022, we're dealing with picking up the pieces from the economy that has been damaged. In this case, I think four years [after 2021] is what we're looking at to get leisure travel back to pre-pandemic levels. Businesses will take at least an extra year." Story has more.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-10-28/general/airlines-will-struggle-long-after-passengers-feel-safe-to-fly-again
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Airlines will struggle long after passengers feel safe to fly again
The Covid-19 pandemic has caused the worst financial crisis in the history of the airline industry. But when the health crisis is over, airlines' financial problems will probably continue for years. History has shown clearly that it takes a tremendous amount of time for passenger traffic to recover after a recession. Most recently, it took a whopping five years after Great Recession ended in 2009 for passenger traffic to recover, according to Philip Baggaley, the chief credit analyst for airlines at Standard & Poors. Even after the relatively mild 2000 recession caused by the bursting of the dot-com bubble, it took until 2004 for US air passenger traffic to again reach its pre-recession peak. "Recessions are tough for the industry. Airlines are dependent on economic growth," said Baggaley. Beyond the years it takes for overall air travel to recover after a recession, historically it takes even longer for a return of business travel, which is the most lucrative sector for airlines -- one most of them depend upon. That's one part of what makes this recession particularly chilling for airlines. On an overall scale the pandemic has caused widespread economic pain, with millions losing their jobs and burning through savings that they might otherwise have used for discretionary spending like vacations. But when it comes to that all-important business travel, the situation is arguably worse. Many companies have fewer employees on payrolls with a need to travel. Most will also be trying to recoup losses or pay down debt caused by the pandemic -- and trimming travel by skipping conferences and meeting with clients virtually is likely to be a cost-cutting measure. And, of course, there are many companies that have gone out of business altogether during the crisis.<br/>"Business travel typically falls farther and takes longer to recover," said Adam Sacks, president of Tourism Economics. Sacks thinks next year's travel will still be significantly affected by the pandemic itself. But he said he believes that in "2022, we're dealing with picking up the pieces from the economy that has been damaged. In this case, I think four years [after 2021] is what we're looking at to get leisure travel back to pre-pandemic levels. Businesses will take at least an extra year." Story has more.<br/>
