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With the boom in air traffic, Have airlines recovered?

By September 20, 2022 No Comments

Since the covid -19 pandemic hit the world, the aviation sector globally has been gasping for breath. Though two and half years down the lane, the aviation sector has been coming closer to what may seem normal. With the passage of every week, the aviation situation is turning better than before. As per the International Air Transport Association, the air commuters to Latin and North America were only 10% and 11.5% below compared to its 2019 counterparts. It reflects positive results, which are further better in some other places as compared.

Brazil, globally at number four in the world domestic aviation sector, got a blow with the 6.85 Lakh deaths. It resulted in the Bankruptcy of LATAM Airlines, one of the largest in Brazil. The worse situation soon flipped in July ahead of 2019, with Cancun and Vegas airports recently reported booming with passenger traffic. Things are still a matter of concern in the east. While at the global level, air traffic is low by quarter, and in the Asia-Pacific region, the number is still touching the half mark. And talking about air cargo, it was a boom in 2021 due to the easing of the covid restrictions and the world returning to its usual goods consumption. The bottleneck situation in the sea and land-based cargo services pushed air cargo services.

Ryanair Airline passengers number in August 2022 peaked at 22% above the normal levels compared to its 2019 counterparts. And display positivity and hope for future growth of the aviation sector, Qantas Airways Ltd. spent $400 million on share buyback. Looking at growth post covid future of the aviation world is to return to its normalcy soon.

If it is true that post-Covid aviation is booming and air transport is getting back to normal, airline stocks are not getting that much boost. Last week Bloomberg’s  World Airline Index pointer touched its lowest since November 2020, the time duration during which global traffic was 12% lower than in previous years.

Leaving stock recovery aside, one thing clear from the Cancun and Vegas airport traffic is that leisure-seeking travelers are in the driving seat of the air-traffic recovery. However, corporate spending is still low, and it has been taking longer than usual the recovery from the Covid pandemic blow. The covid-pandemic has opened up new avenues and a permanent shift in ways the corporate world used to function, replacing video-conferencing with in-person meetings and saving energy resources, cutting up on costs. It opens up challenges for airlines to rethink their method of operation.

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