Mixed views over aviation sector recovery

Covid-19 pandemic changed the landscape of aviation
As a result of increasing instances of Covid-19 around the world, including the emergence of new variants, many governments, including Zimbabwe, have announced additional travel restrictions and border entry measures to add a further layer of protection to safeguard public health.

Travel restrictions are causing severe economic damage and have brought the international aviation industry to a virtual standstill

These measures have been implemented rapidly and unilaterally by other governments around the world resulting in a complex and mainly uncoordinated patchwork of differing restrictions globally, incorporating a variety of travel bans, quarantine, self-isolation, passenger declarations, and Covid-19 test requirements.

Travel restrictions such as quarantines are causing severe economic damage and have brought the international aviation industry to a virtual standstill. Data shows that across the world where some countries recover more quickly, there is no quarantine requirement. However, demand continues to be suppressed where the destination market imposes quarantine or other entry restrictions.

Markets with reciprocal easing of travel restrictions have shown gradual improvements in travel demand. Whereas demand is unlikely to recover so long as quarantine restrictions continue, the trend line for markets with reciprocal easing of travel restrictions shows that removal or restrictions could, at the current typical pace of recovery, make it possible for demand to return to close to 2019 levels within just twelve months.

In other areas (retail, education, hospitality etc.) we see governments pushing to reopen the economy, yet for international air travel the approach is one of extremely low risk and subsequent demand suppression.

The Covid-19 crisis created a virtual system-wide shut down and the most severe downturn ever experienced by the Zimbabwe Aviation sector. Few industries, however, have not been affected as significantly as aviation.

As the virus spread and the seriousness of its implications became better understood, national governments took extreme and unprecedented measures to contain it. Aviation was naturally one of the first industries to be significantly affected, as national governments closed international borders to prevent non-essential travel (albeit countries like Zimbabwe and the United Kingdom kept their borders open). Thousands of holidaymakers and business travellers had their pre-booked flights cancelled. Around the world thousands of planes were grounded and left idle on tarmac.

The loss of air cargo connectivity for key flower exporting countries (including Zimbabwe that export roses, which constitute approximately 70 percent – cut flowers exports from Zimbabwe) shows the importance aviation to support developing economies, especially those dependent on the trade of perishable products.

Major challenges for the aviation sector in Zimbabwe?
Cash burn
One of the main challenges of the Covid-19 crisis for the aviation sector in Zimbabwe is controlling their cash burn in order to survive until air travel demand recovers. Due to the lack of a meaningful recovery during the summer period, International Air Transport Association (IATA) forecasted that the global airline industry will burn through $77 billion in cash during the second half of 2020 (almost $13 billion/month or $300,000 per minute). The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of $5 to $6 billion per month in 2021.
Airline Refunds
Many airlines and travel operators have also failed to refund customers for package holidays and flights in a timely manner, in accordance with their legal obligations. This is an understandable source of frustration for many customers who have found the process for obtaining monetary refunds unnecessarily difficult. People under stress because of the pandemic have faced additional stress because of travel companies who have not refunded their money properly and promptly.

Debt
Lastly outside the top-30 airline balance sheets debt levels are high, so many airlines will have fixed obligations of debt to service and repay even before Covid-19. For Air Zimbabwe, this is an opportunity for the airline to transform itself and develop a long-term strategy in a new playing field environment where every carrier is starting from scratch.
Apart from Air Zimbabwe tackling their huge legacy debt estimated in the region of US$300 million, the issue of loss of highly skilled manpower and having the right management resources will be key.
Recovery in the sector?
There have been optimistic and pessimistic views on when the aviation sector will recover. In September 2020, IATA downgraded its traffic forecast for 2020 to reflect a weaker-than-expected recovery, as evidenced by a dismal end to the summer travel season in the Northern Hemisphere. IATA revised their forecast downwards and they don’t expect global passenger traffic to return to pre-Covid-19 levels until 2024, a year later than previously expected. The recovery is driven primarily by the slow virus containment, reduced corporate travel and weaker consumer confidence.

The rapid adoption of different measures by governments, without the benefit of hindsight or advance planning, demonstrated significant challenges in creating policy, industry guidance and implementation. The journey out of the crisis towards a normalised travel experience provides an opportunity to plan, implement and communicate much more effectively than the compromised evolution to where we are today.

The roll-out of vaccination programmes at scale and associated improving public health situation will necessitate the reopening of international aviation, upon which global economic recovery will be dependent.

Therefore, it is urgent that the Zimbabwe government turns their attention to developing a strategic pathway plan to enable the re-opening of the aviation sector. The combination of Covid-19 testing and vaccination is already acknowledged as the key enabler to lifting layers of travel restrictions.

Recovery for the sector will require supportive government policy and interventions, confidence building and investment over a sustained period of several years in order to carry passenger numbers at a similar level of previous years.

Once the recovery period gets underway there are also likely to be new requirements or procedures and associated costs that will create burdens to restore the passenger experience and the propensity to travel.

We believe that a decisive cut or holiday period on the Zimbabwe Passenger Service Charge (CB) would be another important and effective lever for the Zimbabwe government to ensure that Zimbabwe positions itself in the fast track of the global economic recovery.
Effective crisis planning provisions for new threats, variables and managing these unknowns should form part of the detailed scenario planning. By Adiel Mambara 

Zimbabwean born-Mambara has a demonstrated history of working in the airline/aviation industry. He is currently the country manager (UK and Ireland) for Royal Brunei Airlines. He writes in his own capacity and can be contacted on adielrba@gmail.com