A Detailed Analysis of COVID-19's Impact on the Airline Industry

This report provides a comprehensive analysis of the impact of COVID-19 on the airline industry. It begins with an introduction highlighting the operational challenges faced by airlines due to travel restrictions and border closures, which led to significant financial losses. The main body delves into the specific impacts, including operational function disruptions, such as reduced travel and the grounding of aircraft, financial performance decline due to decreased passenger numbers and cargo transport, job reductions, and the sale of assets. The report also explores the post-COVID-19 impacts and future strategies, such as low demand, the need for cost control, and the potential for using giant planes. Finally, it suggests strategies for future planning, including a focus on customer increment and initiatives for customer care to regain passenger confidence and improve profitability. The report concludes by summarizing the factors that contributed to the financial losses and the solutions to address the adverse situations.

INTRODUCTION TO
AIRLINE INDUSTRY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Assessing the impact Covid-19 on airline industry.....................................................................1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Due to covid-19, countries are bound to banned their national boundaries for that they
cancelled all the aviation facilities. It leads aviation industry to shut down their operation, this
cause as financial loss long term impact on that. The present will provide deeper insight about
the extent to which Covid-19 affected airline industry of UK from several perspectives.
MAIN BODY
Assessing the impact Covid-19 on airline industry
In the context of airline industry, impact of Covid-19 can be presented in the following
way:
Operational function-
As COVID came in world, countries enforced to shut down their national boundaries, so
before announcement for lock down air root is closed, to stop people coming from outside of
country (Amankwah-Amoah, Khan and Osabutey, 2021). Due to this period reduction of more
than 85% traveling from air root is being find out from last year. This directly related to
operational function of airline this reduction reflect that business of airlines had fall and leads
them to make cost-cutting. In fact, popular Airline of UK 'British Airways' has decided to fire
approx 10,000 employees due to covid-19. Airline's way to generate cost in pandemic is carrier
facilities that are also very few at that time. It is because of people are more conservative about
product came out of their locality and focused on product that are necessary for life-hood. So
less import and export transaction are going that reduce the business from carrier facilities
provided by Airline sector.
Further, even after lock down airlines are not allowed to run with capacity more than
50%, so the expenses are as before and reduction in number of passenger's capacity that will
make airline to suffer with more losses. Due to pandemic they are not allowed to cross national
boundaries and after allowing they can't run with full strength, so operation function is more
difficult to perform. For example: British Airways planning to close or sale its 747 jumbo jets as
a result of travel restriction and less no. of passengers in some flight, the airways is operating
only with 25-30% capacity that can't be an enough to retrieve cost of flight. They are making
some profit at the end of 2020 and new strain COVID is founded in founded and once again they
need to shut down their operation and remain idle for more than one month.
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Financial performance and revenue generation
In aviation industry, which is highly impacted its operation activities due to covid, that
directly lead to cause them financially (Maneenop and Kotcharin, 2020). This all start in starting
in Jan. 2020 and ongoing currently, all the companies have to suffer financial losses. Some
financial impact is
Carrier margin- Aviation root is also use for import and export of product that have less
time to deliver and need fast delivery like food and medical equipment. These are very important
for revenue generation to airlines, but due to covid people are more focused on their
requirement. People are looking for homemade and local and avoiding product that are for
reputation, so less use exported product that reduces carrier fair for aviation industry.
Ticket- When situations were normal passengers used to travel from air root to avoid
time wastage, so airlines are getting more passengers, and they are going for expatiation plan.
But after pandemic and adverse situation they are not allowed to take passenger for couple of
months and after that allowed only with 20-40% of their capacity. This all will make then in
position to increase cost of ticket and no. of flights; however, passenger is not willing to travel
frequently so fair from ticket is also become less.
Job Reduction and sale of Aviation - Most aviation companies are not able to collect
cost of their operation and wanted to cut cost, so they are cutting jobs and start firing employees
to reduce some part of cost (Sobieralski, 2020). They are also reducing no. of flights and some
planes are also put on sale by company's like British Airways etc. this is due to financial impact
because companies are not able to received cost part from operation, so they are forced take type
of step.
Security measure- company need to provide all security check that is guided by
authority to health of passengers and staff, it leads to financial loss for company and need some
extra effort. We take an example, if 200 passengers are traveling in a plane for that a special
check of COVID and PPE kit is mandatory that will enhance financial cost for company.
Post covid-19 impact and future Strategies for Aviation Industry
covid-19 has a long term impact on aviation industry, that means companies need be
prepared for that and plan accordingly. Some of future impacts are
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Low demand- there are travel restriction on passengers like quarantine period, covid
check, and some other guidelines. Peoples are willing to avoid travel in near future for tours and
trips, they are travel only if in it necessary so in will reduce demand is passenger's quantity.
Cost control- Right now all aviation companies need to arrange facilities that are
imposed on them for covid. So these lead to increase cost of ticket for passenger, and they will
not choose s expenses ticket. Company need to make cost-cutting from other operation and have
to provide fair ticket cost that is a big challenge for passengers.
Giant plane- For the period where restriction about quantity of passengers are imposed
companies need to used Giant plane. that will allow them to carry more passengers and goods in
same plane, It will be a cost effective tool for them. To acquire big plane and managing them
will be a big challenge for them to address, it needs extra effort and investment.
Strategies for Future Planning
Focused on Customer Increment- companies need to focus with short term target and
to maintain revenue and expenditure by demand and supply equality. It will help to achieve cost
of journey and allow them to survive.
Initiatives for Customer Care- In this period customer are more focused towards their
health, so companies need to make look in favor of that them (Garrow and Lurkin, 2021). They
can also allow facilities like free cancellation, discount on traveling more than one time,
reschedule dates with minimum cost. This will attract passengers for traveling with same flight
and profit making.
CONCLUSION
Study highlights factors that make aviation industry to suffer from financial loss due to
operation that are not held due to pandemic period and what are future impact of COVID and
solution to address this adverse situation.
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REFERENCES
Books and Journals
Amankwah-Amoah, J., Khan, Z., and Osabutey, E. L., 2021. COVID-19 and business renewal:
Lessons and insights from the global airline industry. International Business Review.
p.101802.
Garrow, L. and Lurkin, V., 2021. How COVID-19 is impacting and reshaping the airline
industry. Journal of Revenue and Pricing Management. pp.1-7.
Maneenop, S. and Kotcharin, S., 2020. The impacts of COVID-19 on the global airline industry:
An event study approach. Journal of air transport management. 89. p.101920.
Sobieralski, J. B., 2020. COVID-19 and airline employment: Insights from historical uncertainty
shocks to the industry. Transportation Research Interdisciplinary Perspectives. 5.
p.100123.
Online
COVID-19’S Impact on The Airline Industry: The New Reality. 2021. [Online]. Available
through: <https://osmaviation.com/covid-19s-impact-on-the-airline-industry-the-new-
reality>.
Understanding COVID-19’s impact on the airline sector. 2021. [Online]. Available
through:<https://www2.deloitte.com/global/en/pages/about-deloitte/articles/covid-19/
understanding-covid-19-impact-on-the-airline-sector.html>
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