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View all search resultsThree reasons the airline industry is critical to a global recovery
Assuming the industry survives the challenging months ahead, it will play an historic role in distributing vaccines to the world’s population.
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hares in airlines led the rebound in global stock markets in recent weeks on the news of a significant breakthrough in the race to find a C0VID-19 vaccine. While the surge reflected a welcome “good news day” in arguably the most difficult year in the industry’s history, it was also a reminder of the critical role that the aviation sector will play in the economic recovery in the wake of the pandemic.
A vibrant and healthy aviation sector is a key driver of global economic growth. This is true for three principal reasons.
Firstly, air travel drives spending, which stimulates growth in an airline’s host and destination economies and is key to economic recovery. In a recent study of AirAsia’s economic impact, Oxford Economics found that the airline facilitated more than 3.5 million international visitor arrivals into Indonesia in 2018. Those travelers spent money with tourism service providers, such as hotels, restaurants and taxis, which in turn generated business throughout their own diverse supply chains.
This is why a successful vaccine program will be particularly important for the aviation industry as well as for the economy as a whole. At the global level, total flight numbers remain at only half the level they were in January. In Indonesia, passenger departures were down by 80 percent in September, compared to the start of the year.
Based on the assumption that a reliable vaccine becomes publicly available in 2021 and takes time for global dispersion, the International Air Transport Association (IATA) projects that global passenger activity will not return to 2019 levels until 2023.
Secondly, an active aviation network boosts competition and trade, facilitates business interactions and foreign investment, and encourages new experiences and the exchange of know-how. Many organizations have surprised themselves in the past year with their ability to keep the wheels of business turning while their staff have worked remotely.
But the ability to move across borders, meet new people, and cement relationships adds an intangible value to business that is increasingly being missed. In our study we also found that as airlines repeatedly connect people, businesses and ideas, airline operations bring about productivity gains to the economy.
