As COVID-19 Grounded Planes, Aviation Profits Plunged
COVID-19 started spreading across the world in early 2020, which forced many airlines to cancel their flights. Especially in Australia that implements one of the strictest border policies, Qantas and Virgin Australia have halted all international flights as well as some domestic flights since mid 2020. They still have not resumed international routes as of August 2021. However, looking at outside of Australia, some countries have started easing travel restrictions, primarily for fully vaccinated travelers. This should be a positive sign for airlines, as well as for passengers longing to fly. So, how does the future of aviation look like?
The Future of Aviation: Recovery Depends on Domestic Markets and Vaccination Rates
Lifting travel restrictions happens domestically first and largely depends on vaccination rates. Hence, it is reasonable to expect that airlines that have large domestic markets along with high vaccination rates will recover fast. The five countries that have largest domestic markets are: China, the USA, Japan, Indonesia, and India. China and the USA are the two giants among them.
Looking into the vaccination rates for these countries (data as of 10th July 2021), the USA has the highest percentages of population fully vaccinated; 46% fully and 53.8% partly vaccinated. Although data on Our World in Data show 16% of the population are fully vaccinated with 44% partly vaccinated in China, other source shows that China has rolled out doses enough to vaccinate 63.8% of the population. Japan follows China; 14% of the population are fully vaccinated and 26% partly vaccinated. India and Indonesia have much lower vaccination rates.
As a result Big American and Chinese airlines with large domestic markets and higher vaccination rates expect to rebounce first. Air China, China Eastern Airlines, China Southern Airlines, American Airlines, United Airlines, and Delta Airlines will be among those to recover first.
Airlines Relying on Long-Haul Take Longer to Recover
You may wonder why not airlines in EU, where vaccination rates are also high. For instance, Air France-KLM, British Airways, and Lufthansa. Here’s the reason: the major airlines in this region focus on lucrative long-haul flights, just like other world’s largest airlines such as Emirates, Cathey Pacific and Singapore Airlines.
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