Flying Through the Storm: 2020 in Review

By Emma Rasmussen, Correspondent

Image Source: International Airport Review

Suffice to say that the year 2020 has been a historic and stormy one, particularly for the airlines. Prior to the COVID-19 pandemic that continues to rattle the aviation industry, air passenger analysis projected that 2020 was supposed to be a year of continued expansion in air travel. Instead, airlines worldwide went out of business. Aerospace employees are finding themselves furloughed and out of work, receiving WARN notices or awaiting callbacks for rehiring. Nevertheless, the industry continues to trudge on through its largest ever crisis since September 11th, 2001. Read ahead for Horizons Newspaper’s comprehensive, yet concise 2020 review of the aviation industry.

The International Air Transport Association’s Ever-Changing Predictions 

The International Air Transport Association (IATA) announced on the week of Thanksgiving that the international aviation community will suffer $157 billion in losses by the end of 2020. In June, IATA predicted the industry would only walk away from 2020 with $84 billion in losses. IATA believes that dire straits are still ahead for the industry, with an additional $39 billion in losses expected for 2021. This is $16 billion more than IATA’s previous expectations for 2021. IATA anticipates passenger numbers to drop 60%, the same number that followed the September 11th attacks. 

Bygone Airlines and Numerous Bankruptcies 

Several airlines have filed for bankruptcy protection or have gone under completely since the COVID-19 crisis began. In March 2020, British regional carrier Flybe entered administration after many months of nearing collapse. The pandemic was the final nail in the coffin for the airline, and sealed its unfortunate fate. Shortly after, American regional carrier Trans States Airlines closed its operations months early due to the pandemic. Compass Airlines, another American regional airline that was owned by the same holding company as Trans States Airlines’ also went under in quick succession. Avianca and Virgin Australia filed for bankruptcy in April and May, respectively. Most recently, Norwegian Airlines filed for bankruptcy and Korean Air became the largest shareholder of its now-fallen competitor, Asiana Airlines.

A Lone Stimulus Package

On March 27th, US President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law, where US airlines were eligible to receive $50 billion in financial aid. Airlines were not allowed to fire or furlough employees prior to October 1st as per the stimulus package’s conditions. Currently, no new stimulus package has been passed into law and airlines are continuing their struggle for survival. Politicians in Washington continue to be at odds with one another concerning the conditions of a new stimulus bill for American businesses. 

The Return of the MAX

In November, the Federal Aviation Administration (FAA) cleared the Boeing 737MAX for takeoff after an eighteen month grounding. After a lengthy safety and design review of the troubled airliner, the FAA gave airlines the green light to bring their MAX fleets back into scheduled airline service. Boeing depends on the success of the 737MAX to regain lost ground in its stiff competition with Airbus. The 737MAX ungrounding is good news for Boeing, but could not have come at a worse time. The COVID-19 pandemic has worsened Boeing’s 737MAX troubles, and has forced the manufacturer to shelve projects such as their Middle Market Airliner. 

A COVID Holiday

Airlines across the United States have been hard at work advertising the cleanliness of their aircraft, along with providing education on HEPA air filters to encourage airline bookings. Currently, airlines are mandating masks in order to fly and are blacklisting customers who choose to bend the rules. Throughout November, airline bookings increased significantly with fuller flights. “Pandemic fever” and cheaper fares are driving this unprecedented passenger demand. This holiday season is a promising one for the airlines.

Airline Shares and a Promising Vaccine 

The week of Thanksgiving, shares for legacy carriers such as American Airlines Group and United Airlines Holdings climbed 10% with the promise of a COVID-19 vaccine arriving as soon as December. With an increase in positive news in the media concerning the arrival of a vaccine, airline shares are achieving all-time pandemic highs. Coupled with vaccine hopes, news of the FAA’s intention to unground the 737MAX sent Boeing’s stocks climbing. Airline stocks are still low, though they are up between 22% and 34% for the month of November. The recovery of the aviation industry will be gradual. 

Only Cargo is Safe

“Carrying freight is the only bright spot in the industry” said CNN at the end of November. Cargo airline revenues are expected to climb 15% from 2019 numbers, making it the most lucrative facet of the industry amid the pandemic. During normal conditions, passenger airlines have contracts with the United States Postal Service, for which they will carry mail on regular passenger flights. The decrease in passenger flights has transferred additional mail duties to FedEx, UPS, DHL, and other companies. Airline pilots facing furlough have applied to cargo companies to remain employed. 

What’s next? 

IATA has projected an increase of 2.8 billion passengers for 2021 as promises of a vaccine linger. The 4.5 billion achieved in 2019 will not likely be seen again before 2024, the aviation trade group says. Domestic markets are expected to recover before their international counterparts.