UK-based aviation data provider OAG and other aviation analysts predict that the current dramatic cuts in capacity by global carriers will likely reach its nadir in early April, but add the aftermath of the global COVID-19 pandemic could see a dramatically smaller aviation and airport industry.
During a webinar to discuss the pandemic’s impact of global commercial aviation, John Grant, OAG executive vice president-aviation, says, “This is a very challenging and disturbing time for the whole industry. We’ve actually reached the point where airports are closing as well, so we’re no longer talking about airlines capacity being dramatically cut. We’re actually seeing airports closing because the business has just disappeared.”
OAG earlier this week issued a report that found global carriers cut capacity by 23 percent last week alone, bringing the total seat reduction since the beginnings of the COVID-19 crisis to 35 percent. OAG reports global airlines are now flying 37 million fewer seats than 10 weeks ago,
Some of the experts on the webinar note there are already some glimmers of hope on the international landscape, noting that the rate of capacity reduction in China and South Korea is starting to decline.
Grant predicts that coronavirus, the event, will likely cause some carriers to shut down for good, and that others may consolidate in order to survive.
“There will be casualties, not necessarily in the [large global carrier] end of the spectrum, but what I would term the mid-market airlines, those who are not operating in a niche type of environment with public service obligations or other such structure—or don’t have scale or mass,” he says. “When we went into this there was an airline industry, when we come out of this there will be an airline industry. But the size, shape, scale, structure will be completely different.”
Brandon Sobie, analyst with Sobie Aviation, adds, “We will see some airlines view this as an opportunity to restructure and re-look at their fleets.” That could mean carriers deciding to permanently ground their older A380 and 747 aircrafts and opting for smaller, more fuel efficient planes, he says.
Grant praised many global airports for adapting quickly to the sudden drop in traffic. “Many of these airports are so far down on their capacity and their operations that we’re seeing really creative solutions,” he says. “We’re seeing terminal satellite buildings being closed down in some locations and operations consolidated. Airlines who had their own terminals now sharing terminals.”
Grant says the industry should bounce back eventually but adds, “Capacity expansion may have grown too fast, so this could be a bit of a reset.”