The “resilient” global airline industry’s recovery from the Covid-19 crisis is “now under way across much of the world”, but business travel “remains more problematic” than leisure travel and some aircraft cabins will need to be reconfigured as a result.
That's according to a report on the outlook for aviation by accountancy giant PwC. It finds that both orders and deliveries of new fleet will increase this year and end 2022 close to pre-Covid levels, although the combination of a strong US dollar, rising interest rates, inflation and oil price increases will create headwinds for airlines and aircraft lessors.
Globally, air passenger numbers rebounded by an estimated 18 per cent in 2021 from 2020 levels and were still only barely half of the pre-Covid numbers, the report notes.
"It is clear that when Covid-19 passes, passenger response will be immediate and strong – people will seek to return to the skies as soon as they are physically and legally able and feel safe to do so," said Dick Forsberg, PwC Ireland's senior aviation finance consultant, who wrote the report.
However, passenger number may not fully recover to pre-Covid levels until 2025 or later.
“The majority of the traffic recovery seen to date has involved leisure travel, including vacations and visiting friends and relatives,” Mr Forsberg said.
“The recovery in business travel remains more problematic, particularly for high-yield long-haul passengers, where full-service network carriers often depend on their premium fares and have invested heavily in business-class cabins.”
Airlines will need to modify their product offerings to reflect this, with expanded premium economy cabins replacing some business class capacity to accommodate price-conscious business travellers, the report concludes.
Despite the widespread and prolonged groundings caused by the pandemic, the survival rate of the airline industry has been higher than initially expected, with “only” 64 airline failures, including 30 that have ceased operations, 15 currently in restructuring and 19 that have already emerged from business restructuring processes.
The fallout would have been much greater without the “extraordinary” levels of government support made available to airlines since the start of the pandemic. This is calculated at more than $200 billion (€176 billion) in total.
However, the exceptional levels of indebtedness taken on by airlines will continue to present challenges that may yet trigger failures or need to be addressed through restructuring, the PwC report warns.