Since the end of World War II, the traffic of goods, people and services between states and continents had been growing at a tremendous pace. The interrelations and continuous exchange of people and knowledge between countries had reached its peak in the last few years, and the forecasts were unanimous that 2020 wouldn’t have turned the tide.
But then Covid-19 came along and the pandemic struck the world, taking down globalization and all kind of relations on which the world laid.
Before the outbreak, traveling around the world was a piece of cake. It took 6-7 hours for a Buffalo Mozzarella to be shipped from Naples to a restaurant in New York, as for people to travel from Sicily to Lapland by flight, including the time for passengers to taste a good Cannolo at the airport bar.
The virus itself has benefited from the efficiency of global transport, spreading around the world at a pace unthinkable only 20 years ago.
Even more quickly, the economic downturn has arrived.
The lockdown across the world, the shut borders, and the travel restrictions have forbidden people to travel around the globe or had made it too expensive, triggering a collapse in the aviation industry and putting the airline companies in the hurricane’s eyewall, since the very outset.
In fact, social distancing measures and loss of passengers have made it almost impossible for airplanes to fly, forcing most companies to keep their crews on the ground, with huge losses and Government bailout. It is the case for Alitalia, which has received a 3 Billion bailout from the Italian government, which is now the main shareholder left. Lufthansa is suffering the same fate: last Thursday its shareholders voted for a 10 Billion bailout from the German government because “They just don’t have any money”, which brings the government share in the company up to 20%.
Other Administrations have been following similar paths, in the attempt to preserve an industry that employed 65.5 million of people around the world and underpinned $2.7 trillion of GDP in 2018, according to an ATAG survey.
And as enormous as the measures are, it is not possible to imagine a full recovery of the aviation industry without the resolution of the Covid-19 crisis.
Money can’t buy freedom, and this is a classic example.
Even if the pandemic is over by the end of 2021 and people will be free again to travel around the world, there’s a secondary issue to keep in mind: the economic recession.
It’s true that once the crisis is over, most people who travel for work reasons will start flying again, but a significant share of those who travel for holiday won’t do the same.
The forecasts for the global economy are frightful: according to a survey of the IMF, the world’s GDP will drop of 4.9% in the current year, but it will have a rebound of 5.4% in 2021, even with some differences based on the different economy hallmarks.
As explained by a Behavioural economics’ simple rule, when people are scared about the uncertainty of the future, they simply refuse to spend their money, causing a consumptions fall and savings increase. Therefore, it is likely that even those who will keep their jobs will not spend their money on vacation, therefore on flights.
This effect, combined with the uncertain outcome of the strategies put in place to mitigate the outbreak, will keep the aviation sector under pressure for a long time, and a full recovery is not expected soon.
However, it’s in human nature the desire for exploration. Moreover, flying is still the most efficient way to get around the world and no pandemic can cancel this or change people’s habits.
It won’t be long before our heads will float through the clouds again, but when we do, we’ll see the sky with new eyes.