Cranfield University research shows COVID-19 could lead to smaller, consolidated aviation sector

Cranfield University reported (10-Jun-2020) a research team assessment of the the initial impact of COVID-19 on air transport found the pandemic is likely to lead to a smaller, consolidated sector in the future. The research involved a series of in-depth interviews with senior aviation industry executives along with analysis of flight and air freight data. Interviewees were concerned about:

• The recovery of business travel, mainly due to the cancellation of meetings, incentives, conferencing and exhibitions (MICE) events, and the uneven lift of travel bans;
• Teleworking was seen as a serious threat to demand, with the current context of digital transformation and cloud apps offering better solutions for teleworking than the traditional videoconference;
• The recuperation of the leisure passenger segment was expected to be quicker but reduced disposable incomes would curtail propensity to fly and require significant support, such as route subsidies. Fear and health concerns were identified as major issues for the leisure traveller, more so than for the business traveller;
• In regulatory terms, all interviewees believed that new health screening controls would be imposed at airports, translating into higher costs for airports and passengers, but did not consider social distancing to be a viable commercial option for airlines.

Other COVID-19 consequences highlighted by the interviewees included:

• Full-service network carriers (FSNCs) are likely to be major losers since the recovery in international markets will be slower and they may face new competition with the potential entry of new airlines in their home hub markets;
• Regional airlines were identified as possible short-term winners during the recovery period as they could potentially help FSNCs adjust their feeding capacity;
• Low-cost carriers are expected to concentrate in primary markets with possible entry in hub airports, and a general reduction in frequencies at the route level;
• Regional and secondary airports are likely to lose out as capacity is freed up in larger markets, attracting airlines and enabling larger hub airports to reinforce their positions. [more - original PR]