The Airline Industry is facing the Worst Crisis in its History

For a long time, aviation was considered the industry of superstars. Becoming a pilot or stewardess was, for many, a dream job bar none. A great image, well paid and always jetting off to sunny climes or exotic destinations.

It was a time of glamorous air hostesses serving gourmet meals, of free-flowing free alcohol, and plenty of legroom for all. Luxurious Pan-Am Strato-cruisers would glide across the Atlantic in a leisurely eight hours, ferrying Hollywood stars, politicians, and businessmen.

Crews would party overnight in places such as Paris or the fun-loving Beirut of the 1950’s or 1960’s before returning, ready for the next trip.

There has been a radical change since those golden years, however, not just because of the advent of low-cost airlines, wage dumping and intensive working hours for staff.

Now, airports are deserted, planes are mothballed, and the money’s running out. Stuck between state aid and limbo, the Covid-19 epidemic is destroying an already reeling industry.

In my opinion, the golden age already came to an end around 50 years ago. When charter flights started in earnest in the 1970’s, the specialty was lost to mass tourism.

Tourists in sandals and shorts replaced the once-elegant patrons, airlines began cramming in more and more customers, and that and cost-cutting put an end to the essential delight of flying.

The oil crises of the 1970’s were the catalyst. Now, the atmosphere at many bus stations is more relaxed than at most airports, where, since the attacks on September 11, 2001, we have to be herded through a barrage of security checks.

More recently, the climate preservation movement brought in the so-called concept of ‘flying shame.’

According to this trend from Sweden, anyone who is thinking of traveling by air should be too embarrassed to get on a plane at all, as a result of its ozone-destroying emissions.

The travel industry has felt the effects of this new fad, but worse was on its way.

Since March of this year, and the arrival of Covid-19 and lock downs, the aviation industry has been confronted with the greatest crisis in its history.

Hundreds of thousands of employees have been laid off, state rescue packages have been put together, and uncertainty hovers over the future.

The time of easy and effortless travel, once accessible via travel brochures and the internet, seems to be over for good.

The world’s largest operator of Boeing 747’s, British Airways, has announced that it will no longer operate the iconic aircraft as the travel industry suffers from the fallout of the Corona-virus pandemic.

According to the airline’s website, there are 32 Boeing 747-400’s in its fleet. The jet, which earned the nickname ‘Jumbo Jet’ for its distinctive upper deck shape, served around a dozen destinations, including Beijing, Dubai, New York, San Francisco, Cape Town, and Mexico.

The company initially planned to retire the aircraft in four years, but the collapse in travel demand caused by the pandemic forced it to change its plans.

British Airways, a part of International Consolidated Airlines Group (ICAG), said that it now wants to fly more modern, 15% more fuel-efficient aircraft like Airbus A350’s and Boeing 787 Dreamliners.

Other airlines have already decided to say goodbye to their ageing 747’s amid the industry-wide crisis. Majors such as Virgin Atlantic, KLM, and Qantas Airways decided to phase out the model, and Lufthansa is reportedly ready to follow suit.

It was earlier reported that US aerospace giant Boeing wants to stop making the airliner, which marked its 50th flight anniversary in February 2019. The last ‘Queen of the Skies’ is expected to roll off the production line in the next two years.

The future of aviation is now something of a game of roulette, due to the roller-coaster of stocks and shares.

This is because some investment funds, such as US Global Jets ETF, are betting on a rapid recovery for the industry. However, from a purely financial perspective, how many people want and are able to resume their usual flying habits?

Business flights will continue to collapse, because the video conferencing heavily used during lock-down will end the old practice of business travel. Furthermore, there may be a change in travel behavior because of recurring health risks, perceived or real.

IATA, commercial aviation’s trade association, expects a 50% drop in passenger traffic and cumulative losses of more than $250 billion in 2020.

To put that in perspective, the losses for US airlines as a result of the September 11 attacks were estimated at between $5 billion and $15 billion.

The aircraft manufacturers Airbus and Boeing, and with them the entire supplier industry, such as the highly specialized niche companies in the steel and IT industries, are also affected by the drop-off.

Around 15,000 jobs from a total of 135,000 are being cut at Airbus. Its competitor, Boeing, is dismissing 16,000 employees. Both companies have solved their past problems more cosmetically than fundamentally, in no small part due to government subsidies.

Warren Buffett, born in 1930 (the year before the maiden flight of Pan Am’s American Clipper departed Miami bound for Panama, with Charles Lindbergh – the first man to fly solo across the Atlantic – at the controls), sees no more future for aviation.

His investment company, Berkshire Hathaway, sold all its shares in the four largest US airlines – Delta Air Lines, United Airlines, Southwest Airlines and American Airlines – at a loss in May 2020, accelerating their decline in valuation in spite of low kerosene prices.

Since many things are rearranging themselves in this period of upheaval, the Chinese state-owned aircraft manufacturer Comac could benefit. .

China, like many other states, had turned away from Boeing after design flaws caused crashes. Boeing’s Covid-induced capital crisis has been compounded by a crisis of confidence.

Together with Russia, China further developed its ambitions in this important area of mobility. In recent years, buyers from China have purchased patents and companies on a large scale. We Europeans stood by watching and applauding as contracts were signed in a matter of hours.

The demand for air travel is expected to increase again from 2023, which would require the availability of new fleets.

However, the future of air mobility will probably be determined and controlled by Asian companies and customers. Whether flying will be fueled by hydrogen, or kerosene will be taxed, one thing will likely to be true by 2023.

Some airports west of Istanbul, where the largest airport in the world in 2019 was opened, will be superfluous. And some well-known names in the airline business may already have gone the way of Pan Am, and have crashed and burned.

RT. com / ABC Flash Point Aviation News 2020.