15 April 2020

Publication alert | Cheap flights the latest victim of COVID-19

The tsunami of the novel coronavirus is still hitting economies around the world, but the aftermath could be felt in the aviation industry longer than just about any other sector, according to a new research brief from the United States Studies Centre.

“In one week in March, we saw United Airlines ground half its fleet and by 3 April this year, only 5.2 per cent of the passengers who boarded flights on the same day in 2019 did so,” explained Justin Wastnage, Non-Resident Fellow with the United States Studies Centre. He continued, “anyone who’s hoping we can ride this out until things return to normal again is in for a real disappointment.”

The report goes beyond the current assessment of damage to the aviation industry to explore how this crisis will irrevocably change the course of air travel as we know it. The biggest anticipated change is a sharp increase in costs.

“The need for additional distancing means premium economy will become the norm, but the consumer will have to cover the cost and then some,” Wastnage said, also noting, “less popular routes will become less viable, so we’ll actually see an increase in demand and a decrease in supply. This means a marked and lasting increase in costs to travel by plane.”

Key points

The US is responsible for 37 per cent of air travel globally and this would decrease by 45 per cent from 2019 if the crisis eases by mid-2020.
Increased government intervention in the sector is expected with potential takeover of privately-owned carriers and increased state intervention in airline activities.
COVID-19 certificates from countries will be required for travel (like yellow fever certificates today) and health checks in transit will become the norm.
Corporations will be reluctant to return to air travel even once routes re-open due to duty of care considerations.
There will be a rise in cargo operations from all commercial airlines offsetting lost passenger traffic, leading to a price war that could undercut sea freight.

View research brief