Covid-19 Effects On The Aviation Industry In America
The coronavirus has had a significant effect on the world’s economy, especially in trade and industry. Measures meant at curbing the pandemic have included lockdown, stay at home orders, and a ban on international travel in most countries. The ban on international and domestic travel has dealt a big blow to the aviation industry (Walt), especially in the United States. Therefore, the coronavirus has negatively affected the aviation industry, and its revival will take considerable effort from the government and the industry.
The aviation industry in the US is arguably an oligopoly, as the market is primarily controlled by a few major airlines. The local air travel industry is controlled by four major airlines, with the rest controlling a relatively small percentage of the market. The four major airlines include American Airlines, Southwest Airlines, Delta Airlines, and United Airlines. These four airlines account for about 70 percent of all domestic flights (Segal). Consequently, these four major airlines will feel the biggest loss due to the grounding of domestic flights as a result of the Covid-19 pandemic. Don't use plagiarised sources.Get your custom essay just from $11/page
The aviation industry was performing quite well before the coronavirus, recording a significant rise in the year 2019. Therefore, the industry was projected for more growth in the year 2020. However, the spread of the coronavirus to other parts of the world had already started affecting the American aviation industry. Data from ICAO shows that the United States experienced a reduction in airline passengers by -13,067 in January 2020 and a further -620,296 in February 2020 (ICAO). In terms of revenue, STATISTA shows the North American region had a 2.8% drop in February 2020 (Mazareanu). Therefore, while the industry had experienced steady growth in 2019, the pandemic had led to a decline as of February 2020.
The biggest blow dealt by the coronavirus to the aviation industry has been the halt to domestic and international travel. Data from ICAO shows that the drop in passengers in the US was down by -19% (- 4,950,969) in March 2020 and -88% (-22,976,621) in April 2020 (ICAO). IATA projects that the global aviation industry will lose close to $314 billion, with North America losing about $64 billion in revenue. Other adverse effects on the aviation industry due to the covid-19 pandemic include loss of jobs and bankruptcy of smaller airlines. Experts also project that an extension of lockdown measures due to the coronavirus will further negatively affect the industry.
As a countermeasure to cushion the aviation industry against these adverse effects, the US president signed the 2020 CARES (Coronavirus Aid, Relief and Economic Security) ACT (FAA). The Act includes $10 billion awarded as economic relief to various airports in the US. The US government also plans to offer a stimulus package to companies that will be the largest hit by the pandemic. The economic stimulus package will significantly aid the American aviation industry in its revival after the pandemic.
Works Cited
FAA. “2020 CARES Act Grants Airports.” Federal Aviation Authority, April 20, 2020, www.faa.gov/airports/cares_act/ Accessed April 28, 2020
ICAO. “Effects of Novel Coronavirus (COVID-19) on Civil Aviation: Economic Impact Analysis.” ICAO, April 28, 2020, www.icao.int/sustainability/Documents/COVID-19/ICAO_Coronavirus_Econ_Impact.pdf Accessed April 29, 2020.
Mazareanu, Emilia. “Coronavirus: Impact on the Aviation Industry Worldwide – Statistics and Facts.” Statista, April 29, 2020, www.statista.com/topics/6178/coronavirus-impact-on-the-aviation-industry-worldwide/ Accessed April 29, 2020.
Segal, Troy. “The North American Airline Industry.” Investopedia, June 26, 2019, www.investopedia.com/ask/answers/011215/airline-industry-oligopoly-state.asp Accessed April 28, 2020.
Walt, Vivienne. “For Airlines in Freefall, the return route will be Long and Bumpy.” Fortune, April 19, 2020, fortune.com/2020/04/19/airlines-coronavirus-travel-industry-bailout/ Accessed April 28, 2020.