aviation_enthus
27th Apr 2020, 17:19
I’m sure there are many of us worried about the current crisis caused by Coronavirus and what it means for our careers and future.
Although there has been nothing exactly like the current shutdowns etc, history has plenty of examples. When put together these can provide some insight into wear the future lies. Take what you want from this post but I hope it may provide some comfort that life will go on after it’s all over...
There won’t be a ‘quick recovery’ at the end of this. The economy won’t miraculously bounce back like all the politicians are telling us. Be prepared for a slow recovery.
Even IATA predictions show a V shape recovery taking until 2022. Every other forecast they have is longer, 2024 and onwards.
9/11 resulted in a 30% drop in domestic USA traffic. It took 3 years to recover to the same point and by then the industry was more efficient.
SARS was isolated to SE Asia so can’t really be used as an example. But it also resulted in a 30-40% drop in traffic but only over 6 months.
The Great Depression provides an economic example for what happens when governments don’t intervene like they do now (quantitative easing etc). Again the airline industry was tiny back then so comparisons are useless.
Another interesting statistic, there is a measurable link to household savings versus stock market returns. Basically as the stock market declines the household saving rate goes up. In the GFC with a 40% decline household savings increased from 2% -> 8/10% of income. What this tells us is that the average household may still go to Ibiza/Caribbean/Bali/etc but they aren’t going to go every year or may aim for a cheaper destination.
Travel restrictions on international travel will remain probably throughout 2020. China has had another outbreak in the city of Hubei, placing another 10 million people on lockdown. Individual countries may get it under control and allow domestic travel, but if ticket prices are higher, more people will drive instead of flying. Exactly like they used to when airfares were more expensive.
So given all the above I’ll add my 2 cents and make a prediction but only basing it on the above points.
- more airlines will go broke, even into 2021. This will be because demand won’t recover quickly and those airlines with plenty of cash but slow to react management will find themselves in dire straits when demand doesn’t come back soon enough.
- travel demand will reduce. I’m guessing the first full year of no restrictions will be in the order of 30-40% reduction on 2019 figures.
- I don’t think our first full year of no restrictions will start until mid 2021 at the earliest. So until then demand will be ‘must travel’ with mandatory quarantine at the other end for international.
- job losses will continue throughout the year in ALL industries. While companies may not go bankrupt they’ll be trimming the fat so to speak and making their operations more efficient.
- with all the uncertainty in the economy households will save more money and be careful where they spend it. This will continue through 2020 and will be a dampening effect on any economic recovery despite government intervention.
What would I do? No idea. Hang on to my job and hope for the best at this stage. But if I was made redundant I’d most likely change industries and go in a different direction.
History has pretty much all the answers you’ll ever need. It may not have happened exactly like this before, but there will always be enough examples (of many things) to put together your own jigsaw puzzle and guess at least the direction things might go.
Good luck to everyone!!
Although there has been nothing exactly like the current shutdowns etc, history has plenty of examples. When put together these can provide some insight into wear the future lies. Take what you want from this post but I hope it may provide some comfort that life will go on after it’s all over...
There won’t be a ‘quick recovery’ at the end of this. The economy won’t miraculously bounce back like all the politicians are telling us. Be prepared for a slow recovery.
Even IATA predictions show a V shape recovery taking until 2022. Every other forecast they have is longer, 2024 and onwards.
9/11 resulted in a 30% drop in domestic USA traffic. It took 3 years to recover to the same point and by then the industry was more efficient.
SARS was isolated to SE Asia so can’t really be used as an example. But it also resulted in a 30-40% drop in traffic but only over 6 months.
The Great Depression provides an economic example for what happens when governments don’t intervene like they do now (quantitative easing etc). Again the airline industry was tiny back then so comparisons are useless.
Another interesting statistic, there is a measurable link to household savings versus stock market returns. Basically as the stock market declines the household saving rate goes up. In the GFC with a 40% decline household savings increased from 2% -> 8/10% of income. What this tells us is that the average household may still go to Ibiza/Caribbean/Bali/etc but they aren’t going to go every year or may aim for a cheaper destination.
Travel restrictions on international travel will remain probably throughout 2020. China has had another outbreak in the city of Hubei, placing another 10 million people on lockdown. Individual countries may get it under control and allow domestic travel, but if ticket prices are higher, more people will drive instead of flying. Exactly like they used to when airfares were more expensive.
So given all the above I’ll add my 2 cents and make a prediction but only basing it on the above points.
- more airlines will go broke, even into 2021. This will be because demand won’t recover quickly and those airlines with plenty of cash but slow to react management will find themselves in dire straits when demand doesn’t come back soon enough.
- travel demand will reduce. I’m guessing the first full year of no restrictions will be in the order of 30-40% reduction on 2019 figures.
- I don’t think our first full year of no restrictions will start until mid 2021 at the earliest. So until then demand will be ‘must travel’ with mandatory quarantine at the other end for international.
- job losses will continue throughout the year in ALL industries. While companies may not go bankrupt they’ll be trimming the fat so to speak and making their operations more efficient.
- with all the uncertainty in the economy households will save more money and be careful where they spend it. This will continue through 2020 and will be a dampening effect on any economic recovery despite government intervention.
What would I do? No idea. Hang on to my job and hope for the best at this stage. But if I was made redundant I’d most likely change industries and go in a different direction.
History has pretty much all the answers you’ll ever need. It may not have happened exactly like this before, but there will always be enough examples (of many things) to put together your own jigsaw puzzle and guess at least the direction things might go.
Good luck to everyone!!