Page 148 - COVID-19: The Great Reset

2020), the restart may be just about to begin. It will prove
extremely challenging, with a recovery expected to take years.

The improvement will begin in leisure travel, with corporate travel
to follow. However, as discussed in the next section, consumption
habits may change permanently. If many businesses decide to
travel less to reduce costs and to replace physical meetings by

virtual ones whenever possible, the impact on the recovery and
ultimate profitability of airlines may be dramatic and lasting. Prior
to the pandemic, corporate travel accounted for 30% of airline
volumes but 50% of revenues (thanks to higher priced seats and

last-minute bookings). In the future, this is set to change, making
the profitability outcome of some individual airlines highly
uncertain, and forcing the entire industry to reconsider the long-
term structure of the global aviation market.

When assessing the ultimate effect on a particular industry, the

complete chain of consequences needs to take into account what
happens in adjacent industries, whose fate largely depends on
what happens in the one upstream, or “at the top”. To illustrate

this, we take a brief look at three industries that entirely depend
on the aviation sector: airports (infrastructure and retail), planes
(aerospace) and car rentals (automotive).

Airports face the same challenges as airlines: the less people
fly, the less they transit via airports. This in turn affects the level of

consumption in the various shops and restaurants that make up
the ecosystem of all international airports throughout the world.
Furthermore, the experience of airports in a post-COVID-19 world,
involving longer waiting times, highly restricted or even no hand

luggage and other potentially inconvenient social-distancing
measures, could erode the consumer desire to travel by air for
pleasure and leisure. Various trade associations warn that the
implementation of social-distancing policies would not only limit

airport capacity to 20-40% but would also likely render the whole
experience so disagreeable as to become a deterrent.

Dramatically affected by the lockdowns, airlines began to
cancel or defer orders for new aircraft and to change their choice

of particular model, in so doing severely impacting the aerospace

147