INTHEBLACK December 2021 - Magazine - Page 45
STORY SUSAN MULDOWNEY
W
AT A
GLANCE
Pre-pandemic, the airline sector
supported US$3.5 trillion
(A$4.8 trillion) in global economic
activity but, in 2021, the sector is
estimated to have sustained losses
of more than US$108 billion
(A$149 billion).
Alan Joyce, CEO of
Qantas, talks to the media
at the Qantas Jetbase in
Sydney, Australia. In
October 2021, Qantas
announced that all
Australia-based Qantas
and Jetstar employees
will be able to return to
work in December 2021.
Although the short-term outlook
presents a relative improvement
in terms of border closures and
lockdowns, industry experts
predict a series of cyclical ups
and downs in the long term.
Navigating these cycles will
require a rethinking of goals,
strategies and business models
until business activity returns
to pre-pandemic levels.
hen Qantas CEO Alan Joyce
announced the airline’s A$1.7 billion
loss for the 2021 financial year, he
described trading conditions as
“diabolical”. As of September this year, Australia’s
international border had been shut for 18 months
and local carriers had endured more than 330 days
of domestic travel restrictions. “By the end of this
calendar year, it’s likely COVID-19 will cost us more
than A$20 billion in revenue,” Joyce lamented.
The Qantas chief ’s sentiment is matched by civil
aviation leaders across the globe as the industry
continues its struggle against the headwinds of the
global pandemic. The sector supports US$3.5 trillion
(A$4.8 trillion) in global economic activity and,
while signs of life are emerging across pockets of
the industry, the disruptions of COVID-19 remain
challenging to navigate.
The International Air Transport Association (IATA)
predicts net airline industry losses of US$47.7 billion
(A$66 billion) in 2021. This is on top of the estimated
net loss of US$126.4 billion (A$175 billion) in 2020.
Airlines in the Asia-Pacific have experienced the
deepest decline of any region, with full-year traffic
plunging by 80.3 per cent in 2020 compared to the
previous year. Virgin Australia was an early casualty.
Placed into voluntary administration in April 2020
with debts of A$6.8 billion, the carrier was bought
by US private equity firm Bain Capital after creditors
agreed to a A$3.5 billion deal.
Global airports are also feeling the strain. Airports
Council International estimates they will suffer the
loss of more than US$108 billion (A$149 billion)
in revenues by the end of 2021.
With the collapse in global air travel demand driven
largely by public policy, the timeframe for recovery
remains uncertain. What will it take for the clouds
to lift on the global airline industry?
RESPONDING TO TURBULENCE
The civil aviation industry has proven resilient to
shocks in the past. The terrorist attacks in New York
in 2001, for instance, caused an immediate decrease in
air traffic demand due to security fears, but the impact
was relatively short term. World Bank data shows
1.63 billion passengers travelled worldwide in 2002 –
a small decline from 1.66 the previous year.
While the outbreak of the SARS virus in 2003
caused Asia-Pacific airlines to lose US$6 billion
(A$8.3 billion) in revenue for the year, according to
figures from IATA, monthly international passenger
traffic returned to its pre-crisis level within
nine months.
intheblack.com December 2021 45