Site Menu

COVID-19 Update: The Impact of the Pandemic on the Air Travel Industry

Throughout the pandemic, airlines around the world have taken drastic financial and logistical measures to mitigate this unprecedented storm. From mass job cuts to consolidated routes, our team analyzed how the air travel industry is managing this crisis.
The impact of the COVID-19 pandemic is wide and deep in many social and economic areas. Most industries have been shattered to their core, especially the travel industry and the civil aviation sector. The International Air Transport Association (IATA) is predicting that the industry will lose more than $84 billion in 2020[1]. According to the trade association, the airline industry will not recover its losses until at least 2023. In recent weeks, airlines around the world have announced drastic financial and organizational measures to weather this unprecedented storm.

Photo: Lufthansa, Etihad and British Airways planes parked at Teruel Airport, one of Europe’s largest airplane parking and storage facility.
David Ramos/Getty Images

Reduced Demand Shapes New Route Map

A survey conducted by IATA confirms passengers’ unwillingness to travel by air with 58% of the people surveyed indicating they have avoided air travel and 33% stating they were not planning on traveling soon[2]. Besides the fear of contracting the virus at the airport or during the flight, one of the biggest barriers is the concern of having to quarantine when traveling.
These valid concerns in addition to the international border closures established by most countries have resulted in a steep decline in the number of air passengers (both international and domestic) ranging from 48% to 61% in 2020 compared to 2019[3].

Consequently, airline carriers decided to suspend or consolidate routes and retire fleets to match the demand. At the peak of the pandemic, nearly two-thirds of the global aircraft fleet composed of 23,600 airplanes was “in-storage” status. In the U.S. alone, 37% of the total airline fleet remains idled as of July 5th[4].


As the peak of the pandemic seems to have passed in several countries, some reassuring trends are worth highlighting. Though they are starting from very low levels and focused on domestic travel, bookings are slowly picking up. In Asia, interest in booking flights raised by 10%, reaching approximately 40% of pre-crisis demand levels by early May. In Europe, demand is picking up after the European Union nations reopened their borders on July 1st. Greece, Malta, Cyprus and Croatia are among the focus destinations for the region. In the U.S., while the number of new infections has spiked in recent days, airlines plan on ramping up their domestic service throughout the summer. Still, carriers such as American Airlines will only operate 20% of their international flights with many airplanes expected to fly nearly empty[5].

Mass Job Cuts Across the Industry

Although most carriers have received loans and bailouts from their respective governments, the financial aids do not seem sufficient in light of this unprecedented crisis. As a result of the all-time low demand and widespread travel restrictions, most airline companies have had to reduce costs, starting with cutting down jobs globally[6]. In the United States, United Airlines announced earlier this week that 36,000 employees received a layoff warning letter. This announcement affects nearly 40% of United Airlines’ 90,000 total staff. In Europe, Air France which does not expect to see its activity return to its pre-pandemic levels before 2024, has announced it will cut 7,500 jobs. Other European airlines including British Airways, EasyJet, Virgin Atlantic, Ryanair, Scandinavian Airlines, and Lufthansa are seeking to cut a combined total of 53,650 employees[7]. After laying off 600 pilots and cabin crew in training, Emirates let go of another 7,000 employees in a second wave of job cuts.  

On the other end, Asian-based airlines are pushing other spending reduction initiatives to avoid job cuts. Korean Air, Japan Airlines, All Nippon Airways, and Taiwan’s China Airlines and Eva Air have all opted for pay cuts and unpaid leave with some carriers requiring financial support from respective governments[8].

The air travel industry supports over 65 million jobs, 25 million of which are now at risk due to COVID-19[9]. As airlines take action to stop spending, many airlines have also decided to put their orders of new aircraft on hold. Consequently, suppliers such as Boeing or Airbus have also been required to reduce costs by respectively cutting 13,000[10] and 15,000 jobs[11].



Network Consolidations Result in Hub Closures

Some airlines are also consolidating their operations, favoring high-profile, centralized airports. What do these consolidations mean for regional airports? In times where airports need to invest a lot of money to make their terminals safe for passengers, not receiving revenue from these airlines could be dramatic.

EasyJet announced late June the closure of its hubs at regional airports in the U.K. including Stansted, Southend, and Newcastle airports. Gatwick Airport is another U.K. airport facing uncertainty as two of its biggest carriers, Virgin and British Airways, announced plans to review their presence at the airport[12]. In March, Delta also announced the suspension of its flights at smaller airports, shifting its operations to the neighboring international hubs[13]. For instance, the airline suspended flights to Hollywood Burbank Airport (BUR) and Long Beach Airport (LBG) while continuing to service Los Angeles International Airport (LAX).

Airports around the world are facing a deep financial crisis. According to the latest report published by the International Civil Aviation Organization (ICAO), airports around the world have lost a combined 36.3 billion dollars since the beginning of the pandemic[14]. Not only are they now receiving decreased income from their first source of revenue, passenger fees included in the flight fares, their second source of revenue, profits from commercial activities, is also at a record low with very little traffic through the airport[15]. To save money, airports have had to shut down completely, such as Orly which was closed for several weeks until the end of June, or are opening a limited number of terminals like London Heathrow where Terminal 2 and 5 are the only terminals available for airlines[16].

Sources of Revenues for Airports


It is hard to predict what the future will be. Will the fall season bring a second wave of cases? Will countries need to close their international borders again to manage new spikes in infection rates? This pandemic was nothing like anyone had expected and required the air travel industry to change the way they do business. Last year, experts predicted global travels would reach an all-time high. Instead, the world took a hundred steps back and demand decreased nearly 90% worldwide. It will take years for stakeholders in the industry, from airline carriers to manufacturing suppliers, food vendors, maintenance companies, and airport retail to recover from this unprecedented storm. For now, the industry is working towards reassuring passengers and showing that when people are ready to travel again, planes will be there to take them to their destination as safely as possible.