Eighteen months of global lockdowns and ongoing border closures have devastated the aviation industry. In 2020, the industry’s revenues came to $328 billion, which was a 60% drop on the previous year, due to reduced numbers of flights and reduced demand to travel abroad. Even now, in late 2021, airlines are not carrying the numbers of passengers they were before the pandemic, and industry experts do not expect traffic to return to normal before 2024 at the earliest.

Leisure trips are expected to grow at the fastest rate out of any reason to travel. This was visible even a few months after the outbreak of the pandemic, when international travel was allowed between certain countries. Meanwhile, business trips were replaced to a great extent by remote work and Zoom meetings; previous crises such as 9/11 or the 2008 economic disaster have shown that business travel recovers extremely slowly in comparison to leisure trips.

The increased demands placed on airlines during and after the pandemic will also cause large increases in ticket prices. Many airlines have had to go into debt or borrow great deals of money in order to stay afloat, and must also now provide appropriate cleansing and/or PPE depending on the countries they are in; all of these factors mean that airlines will remunerate themselves by increasing their ticket prices.

Air freight was the main source of revenue for most airlines during COVID restrictions; while passenger flights had to be reduced, cargo flights could continue with some caveats. As a result, cargo yields increased by about 30% in the last year, and many airlines brought their cargo freighter fleets out of retirement. This trend is expected to continue, but the share of revenue generated by air freight will reduce as passenger flights return to their pre-pandemic rates.

Source: www.mckinsey.com