The Future of Air Travel

Airlines Continue Job Cuts

Airlines have experienced a period of unprecedented turbulence due to coronavirus. Before the pandemic set in, air carriers provided about 5.9 million seats on international flights each week. That number has now fallen to just half a million and the industry could lose over $300 billion in revenue this year.

Though coronavirus infection rates have leveled off in many countries and certain sectors of the economy are reopening, air travel may not be able to take off again anytime soon. In fact, Delta Air Lines (DAL) CEO Ed Bastian said, “I estimate the recovery period could take two to three years.”

In anticipation of this downturn that could last for several years, airlines around the world have continued to slash their workforces. British Airways announced on Wednesday that it will cut up to 12,000 jobs. International Airlines Group, which owns the airline, saw shares fall 6% on the news. SAS, Scandinavia’s largest airline, will cut 5,000 jobs, or about 40% of its workforce. Boeing (BA) also announced that it will lay off about 10% of its employees, 16,000 people in total.

New Safety Measures

Airlines have adapted to difficult situations before. Their industry was upended following the September 11 attacks. Once again, airlines are developing creative solutions for keeping workers and passengers safe. JetBlue Airways (JBLU) announced on Monday that it will require passengers and crew members to wear face masks on flights starting May 4. American Airlines (AAL) will require staff to wear masks and will offer passengers hand sanitizer and protective equipment starting May 1.

Airport security will likely see changes as well. On Wednesday, Emirates conducted rapid COVID-19 blood tests of passengers on a flight from Dubai to Tunisia. The airline says the test results were ready in 10 minutes and it plans to implement the procedure for other flights soon. Thermal cameras will likely also become a fixture at airports in order to check that passengers are healthy before they board flights.

As airlines regain their footing, travelers will also likely face higher fares and fewer available flights, especially cheap, short-hop options, as air carriers will be looking to save money however possible. If some airlines fail, there will also be less competition to drive down ticket prices.

The Impact on Tourism-Centered Economies

Countries that rely heavily on tourism could also feel shockwaves from coronavirus for months or even years to come. In 2018, tourism accounted for 10.4% of all global economic activity, equal to $8.8 trillion. The industry also provided an estimated 319 million jobs worldwide.

Some countries are even more reliant on travelers pumping money into their economies. Over one-fifth of GDP comes from tourism in Thailand and the Philippines. Spain and Italy, which have been particularly hard-hit by the virus, gain 14.9% and 13% of their GDP from tourism respectively.

The tourism industry has recovered from setbacks before, and many are confident that this rough patch will be no exception. In the British Virgin Islands (BVI), a whopping 92% of GDP comes from tourism, but Andrew Fahie, Premier of the BVI, remains optimistic , saying, “Our tourism industry has faced many crises before, from natural disasters to epidemics, and we have always come out strong on the other side.”

---

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS43003