What's Instore For Aviation In 2021?

This blog discusses expectations and road to recovery for the aviation industry in 2021.

A Brief Look At 2020

2020 will go down as the worst year ever in the history of aviation.

The COVID pandemic threw everything at the aviation industry and its safe to say that it has changed the world like no other for many decades. The present crisis has had a ripple effect on all aspects of human life and will continue to have disastrous social and economic impacts for several years to come.

The aviation industry faced its worst ever economic crisis in the face of a half trillion-dollar revenue drop (from generating $838 billion in 2019 to a mere $328 in the entire 2020). Some other devastating effects includes a massive plummet in passenger numbers from 4.5 billion in 2019 to 1.8 billion in 2020. On the contrary, cargo trends buckled the steeply declining trend, as cargo revenues increased from $102.4 billion in 2019 to $117.7 billion in 2020.

2021 – The Year of Recovery

Just as everyone thought the peak of the pandemic would end with 2020, a recent outbreak of new COVID variants has diminished such hopes of optimism. Many regions such as Europe, UK, Japan, Brazil have been gripped by the second and third wave of the pandemic.

Although the situation seems tough, 2021 has begun with a promising hope for all humans as several vaccines have been approved, giving some sense of cautious optimism.

According to the recently unveiled World Airport Traffic Forecast, markets with massive international travel are expected to recover to pre-COVID levels by at least 2024.

Better financial numbers expected in 2021

According to IATA, the airline industry is expected to see a significant turn for the better in 2021 when compared to the performance in 2020.

This financial assumption is taken on the basis of vaccines being rolled out globally, opening of borders by mid-2021. This means that revenues are expected to rise from a dire $38.7 billion in 2020 to $459 billion in 2021. However, with the increased safety measures and touchless technology required, the costs to operate the airlines is expected to rise by $61 billion. Moreover, passenger numbers are expected to rise to almost 2.8 billion in 2021.

Challenges to Recovery

Whilst the industry will see enhanced performance in 2021 when compared to 2020, the journey is expected to be long and difficult. Some key challenges faced by the industry are as follows:

1. Debts & Financial Support: Many airlines are dependent on government support in order to survive this pandemic. However, even after $173 billion of government support in 2020, the median airline only has 8 months of cash to survive. This is concerning for airlines in the long run.

2. Quarantine & Closed Borders: One of the major factors affecting the immediate route to recovery is the travel restrictions and quarantine measures. Thus, a swift revival of the international aviation industry is improbable.

What more to expect in 2021?

Business Travel Expect to Return – The leisure aviation industry is expected to be back on its feet by 2021 according to Forbes. The only real question is timing. Many hopefuls believe by the end of 2021, business travel will be back to normal.

Locked in Demand – Several countries worldwide have placed tight restrictions due to the second or third wave of the pandemic. This means people’s desire to travel will have increased as the sun sets on this pandemic. Thus, global air travel demand is expected to rise significantly.

737 Max is Back – Boeing 737 Max is expected to be back in the skies as Ryanair will order heaps of the machine at a very affordable price, this will rebuild the lost confidence by the public in the Max.

Emirates Premium Economy – After making their passengers wait for several years, Emirates finally unveils its premium economy cabin. The premium economy seats offer the passengers with room with seat pitch of up to 40 inches, a wider 19.5-inch seat compared to standard 18 inches. Moreover, they are arranged in more compact 2-4-2 layout. These seats are integrated with Emirates flagship aircraft, the A380 and currently offers spot upgrades for its valued customers on discretionary basis.

Sustainability Initiatives – With billions of dollars invested in Research & Development, major technology breakthroughs are expected in the coming months or years.

Reopening Borders – With the recent progress in vaccination many countries border such as Australia, New Zealand are expected to open by the mid or end of 2021.

Looking ahead to clearer skies

Although in hindsight 2020 will be looked back as the year where many lessons were learned, we must learn to change and adapt according to the challenges ahead. However, clearer skies are ahead of us and now is the ideal time to reshape the way we do things. We need to make every day count and seize this time as an opportunity to make a difference in creating a world that works for all of us.

(Sources: IATA.org, Forbes.com)