Weak air-travel demand due to coronavirus woes is denting Allegiant’s passenger revenues, which plummeted 46.5% in the first nine months of 2020. With the coronavirus outbreak continuing to spread around the globe, the aviation industry is being jolted. cookies, McKinsey_Website_Accessibility@mckinsey.com, Travel, Logistics & Transport Infrastructure Practice, offer maximum connections with the minimum number of flights, fly routes that would otherwise not be viable based only on local demand, thereby increasing the frequency of flights to popular destinations, concentrate passenger flow volumes, enabling the use of larger aircraft with lower unit costs and increasing schedule efficiency, reducing unit costs even further. Economic Performance of the Airline Industry Key Points • Theimpactof COVID-19 on the global economy will be severe. On 23 November 2020, Qantas announced that the company will ask for proof of COVID-19 vaccination from international travelers. Our flagship business publication has been defining and informing the senior-management agenda since 1964. 1 Connecting passengers are counted twice (once arriving, once departing), so shares of overall connections are higher when looking at handled passengers. Digital upends old models. Although smaller in volume, flows between cities that are not in the top 100—which are well suited for hubs to serve—grew 8 percent annually over the same period (Exhibit 3). As a Premium user you get access to the detailed source references and background information about this statistic. COVID-19 has drastically decreased airline traffic across all routes, but the volume of connecting passengers has been among the hardest hit. Going forward, the relevance of the model will depend on the ability of airlines to adapt their operations to the realities of the next normal. Register in seconds and access exclusive features. Learn more about how Statista can support your business. “The aviation industry was initially hoping for the same response following COVID-19.” But that’s not happening. Latest developments in the COVID-19 pandemic. Zoom is a … If you would like information about this content we will be happy to work with you. You only have access to basic statistics. COVID-19 continues to wreak havoc within the airline industry and has weakened airline hubs in the short term. Subscribed to {PRACTICE_NAME} email alerts. To a certain degree, the larger drops in demand for and supply of connecting flights, versus nonstop, are in line with other longer-term trends. In 2019, for example, 80 percent of the seat-kilometer capacity of 787s was deployed to or from one of the 30 largest airports globally. Travelpac, UK Office for National Statistics, 2020, ons.gov. Airline industry executives also think their workers should be vaccinated first. Beyond short-term planning to guide the reopening of their networks, airlines should also develop longer-term strategies to ensure that they are well positioned in the postcrisis environment. Something went wrong. Quick Analysis with our professional Research Service: Content Marketing & Information Design for your projects: Industry-specific and extensively researched technical data (partially from exclusive partnerships). We believe that, though there will be short-term pressure on hubs and fewer hubs in the longer term, the model will remain relevant in the postcrisis world. 4 Trends Defining the Airline Industry’s Future Lackluster Passenger Demand: The advent of the coronavirus pandemic paralyzed air-travel demand, thereby hurting passenger revenues. Hub airlines are already starting to take advantage of the potential offered by smaller long-range jets. Even before the crisis, however, the future of the hub model was the subject of a long-running debate. This shrinking share can be attributed to the growth of P2P carriers, with low-cost carriers seeing a particularly significant increase in their market share (Exhibit 1). We cut through the noise for you. Update, Insights into the world's most important technology markets, Advertising & Media Outlook In a hub model, airlines use banks of incoming and outgoing flights to offer passengers a large number of possible itineraries. A longer-term trend is at play here, too: international leisure air trips to and from the United Kingdom grew 3.4 percent per year from 2000 to 2019, whereas international business trips grew just 0.2 percent per year. Building capacity for the future, IATA Global Airport & Passenger Symposium, Warsaw, Poland, October 15-17, 2019, iata.org, p.18. You need at least a Single Account to use this feature. Use minimal essential In the short term, airlines will need to seek out new sources of insight to guide the tactical rebuilding of their networks. We'll email you when new articles are published on this topic. Available to download in PNG, PDF, XLS format, Access to this and all other statistics on 80,000 topics from. Published connection times have been unrealistic at times, inducing much stress at the more congested hub airports. These efficiencies generally flow through to passengers, who can then pay less—and fly on a larger number of itineraries through one booking—by connecting through hubs rather than traveling on nonstop routes. "Year-on-year Change on Seat Capacity Due to Coronavirus in 2020 and 2021, by Quarter and Region of Airline Registration*. Reinvent your business. 4. Hub airlines should reassess the economic performance of their hubs as they begin to rebuild their flight schedules. November 25, 2020 08:32 AM Eastern Standard Time DUBLIN-- (BUSINESS WIRE)--The "Key Trends in Airlines" report has been added to ResearchAndMarkets.com's offering. As soon as this statistic is updated, you will immediately be notified via e-mail. Monthly passenger load factor (PLF) on international flights by region 2020, Monthly international revenue-passenger kilometers (RPK) change by region 2020, Air traffic - worldwide revenue with passengers 2005-2021, Air traffic - passenger growth rates forecast 2020-2039. "Year-on-year change on seat capacity due to coronavirus in 2020 and 2021, by quarter and region of airline registration*." What is worse is that the slight improvement in air-travel demand went for a toss with the renewed spike in coronavirus cases in the United States. As good as the news was for U.S. airlines with additional aid as part of the $900 billion Covid-19 relief package approved by Congress on Monday, a … However, we see a continued role for the hub model as traffic starts to come back. and over 1 Mio. Unleash their potential. Press enter to select and open the results on a new page. People create and sustain change. Despite its benefits and the spate of recent improvements in customer experience, a number of industry observers point to several trends that could weaken the role of the hub—some of which have been strengthened, and some undermined, by the current crisis: Nevertheless, the current crisis need not spell the end for the hub model. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. Select topics and stay current with our latest insights. Updated 12:23 PM ET, Tue November 24, 2020 London (CNN Business) More huge losses are looming for the airline industry as carriers brace for the Covid-19 crisis to extend well into … In the second quarter of 2020, European airlines had a 90.1 percent loss in seat capacity. Many airlines simply follow competitor pricing on connecting trips. Six months of carnage and counting: Travel industry struggles to rebound from COVID-19 Six months since the coronavirus pandemic was declared, the travel industry … The coronavirus pandemic left fleets of planes grounded and … Questions have arisen as to whether the current crisis will lead to structural changes within the industry. 648,042 Average daily number of travelers screened by TSA at U.S. airports July 1 to 27, 2020, down 75% from a year earlier. * Figures are based on a V-shaped recovery taking into consideration airlines' most recent expectations, a supply based on latest updates of airline schedules, which are adjusted accordingly to the evolving situation and a demand based on a quick recovery to business as usual. The unprecedented nature of the crisis means that airlines’ traditional methods of predicting demand, which typically involve extrapolation from historical patterns, are no longer appropriate. The benefits of the model for airlines and passengers remain largely intact, and long-term trends—including rising demand for thinner routes and the increasing market share of leisure travel—support the continued importance of hubs. A smaller set of well-capitalized airlines makes sense for an industry with enormous exposure to external shocks, but it would be a mistake to assume the post-2020 industry … Chart. The ideal entry-level account for individual users. On the demand side, part of the explanation is the decrease in long-haul, intercontinental itineraries, where connecting is more common. ... 2008 2010 2012 2014 2016 2018 2020 ge IATA survey of airline CFOs and heads of cargo Passenger services growth ... During the COVID-19 crisis, airlines sought support New, Figures and insights about the advertising and media world, Industry Outlook Dollar Flight Club analyzed airfare and industry data using millions of data points from both 9/11 and the Great Recession of 2008 to predict how the COVID-19 outbreak will affect travelers and airlines when the world opens back up to travel in 2020 and beyond. It is not the newspaper industry; it has a sustainable business model and no one has found a replacement. For the first edition in International Airport Review’s magazine series of 2020, we spoke to a few of our prestigious advisory board members for a review of 2019, predictions for 2020, and exclusive advice for airports. The airline industry is among the most affected by the COVID-19 crisis, and global air-passenger volume in August 2020 was still down around 64 percent compared with the same period in 2019. The growing market share of connecting flights on intercontinental routes is largely due to the success of the hub-and-spoke model, which has contributed to the emergence of megahubs, such as those as in Dubai and Istanbul, over recent decades. Global GDP growth is expected to contract by 5.0% in 2020. Directly accessible data for 170 industries from 50 countries Alas, the COVID-19 pandemic has undermined the good work the industry did. The share of connecting traffic at the global level has been falling in recent years—save for select intercontinental flows, which had been largely stable or growing before the crisis. Please contact us to get started with full access to dossiers, forecasts, studies and international data. In, ICAO. Schedule data, however, suggests that the vast majority of these capacity types is deployed to and from hubs, indicating that these types can also strengthen hub operations. Short term, airlines and hubs will need to tactically rebuild their networks. Whereas large aircraft (such as A380s, which are now being phased out) were deployed primarily on hub-to-hub routes, smaller long-range jets (such as 787s) could open up new opportunities to serve long-haul routes economically and directly, such as from Tokyo to Boston (Exhibit 2). The last nine months have been anything but ordinary, as the global coronavirus pandemic affected practically every aspect of our lives.. Among other potential benefits, using these jets to serve long-haul markets directly can bolster network privilege. ... September 2, 2020 4:15 PM ET. The new networks’ bank structures can be less rigid and operate with longer connecting windows. Second, price-sensitive leisure travel—which is more closely linked with connecting flights—is expected to recover and grow more quickly than business travel in the coming years. The travel industry saw a precipitous drop in business after the coronavirus developed into a pandemic. Airline stocks dropped sharply on … November 4, 2020. Coronavirus has brought travel and tourism to a standstill, and may irrevocably change the industry. An aerial view shows American Airlines and Southwest Airlines jets parked at McCarran International Airport amid the spread of the coronavirus on May 21, … Statista. Airlines should instead invest in new tools that can provide real-time information to track travel demand. New, Everything you need to know about the industry development, Find studies from all around the internet. ", ICAO, Year-on-year change on seat capacity due to coronavirus in 2020 and 2021, by quarter and region of airline registration* Statista, https://www.statista.com/statistics/1106545/coronavirus-impact-airline-capacity-quarter-region/ (last visited February 03, 2021), Year-on-year change on seat capacity due to coronavirus in 2020 and 2021, by quarter and region of airline registration*, Coronavirus: impact on the aviation industry worldwide, Global air traffic - scheduled passengers 2004-2021, COVID-19's impact estimate on passenger revenue of airlines by region 2020, Passenger change in the aviation industry by scenarios 2020-2021, Job loss in industries associated with air travel due to COVID-19 by region 2020, Types of government aid to airlines due to COVID-19 as of September 2020, Weekly flights change of global airlines due to COVID-19 as of January 2021, Coronavirus: year-on-year change on seat capacity by quarter & region 2020-2021, Coronavirus: TSA checkpoint travel numbers at U.S. airports 2019-2020, Air cargo traffic - worldwide volume 2004-2021, Air cargo traffic - worldwide revenue 2004-2021, Increase in top commodities in global air cargo trade April-May 2020, Belly and freighter capacities in air cargo worldwide January 2020 - July 2021, Aviation industry - monthly freight load factor by region 2020, Global aviation industry: FTK change January-November 2020, Air freight rate change since the beginning of COVID-19 outbreak 2019-2020, Revenue loss of the aviation industry by scenarios 2020-2021, Government aid to airlines due to COVID-19 by airline 2020, Liquidity and total debt balances of leading U.S. airline groups 2019, Coronavirus: quarterly revenue loss of airports by region 2020, Coronavirus: passenger traffic change in Europe 2020, Willingness of travelers to fly in the aftermath of the coronavirus pandemic 2020, Expected flight preferences of people in the aftermath of the coronavirus 2020, Factors impacting flight purchase preferences of travelers post-coronavirus 2020, Impact of COVID-19 on passengers' willingness to fly by region 2020, Concern of air passengers to contract COVID-19 while traveling 2020, Catching COVID-19 worry during a shared transportation by type 2020, Coronavirus: impact on aviation RPKs by region 2020, Chile: number of passengers transported on domestic routes in 2016, by airline, Chile: number of kilometers flown by airlines on domestic routes 2016, by airline, Chile: PLF on domestic routes 2016, by airline, Chile: number of aircraft takeoffs on domestic routes 2016, by airline, Chile: number of hours flown on domestic routes 2010-2016, Chile: number of airline passengers 2010-2018, Chile: ASK on domestic routes 2016, by airline, Chile: number of passengers arriving in selected cities on domestic routes 2016, Chile: number of domestic air passengers 2016, by city, Chile: RPK on domestic air routes 2016, by airline, Chile: number of hours flown on domestic routes 2016, by airline, Chile: RPK on domestic air routes 2010-2017, Colombia: air distances flown on routes involving Colombia 2016, by airline, Chile: number of kilometers flown by airlines on domestic routes 2010-2017, Value of COVID-19 stimulus packages in the G20 as share of GDP 2020, Impact of coronavirus on the number of freight movements in Poland 2020, Oscars articles with highest social media engagement as of February 2020, Global in-car entertainment market size 2018 & 2026, Coronavirus: impact on the transportation and logistics industry worldwide, Find your information in our database containing over 20,000 reports, Tools and Tutorials explained in our Media Centre. To decrease stress during tight connection times, for instance, operations control centers could dynamically adjust cruise speed, allocate gates to minimize the distance that passengers have to walk between flights, and fast-track passengers with challenging connections through security. Its economic benefits—an efficient model for airlines and attractive prices for passengers—remain largely intact. Optimum postcrisis pricing may require recalibrating fares across both connecting and nonstop flights; structurally lower business demand may necessitate a lower premium on nonstop services. Many of those needing to travel—especially between less popular origins and destinations—are more likely to take connecting flights than they would have been before the crisis. The limited scheduling of the immediate-postcrisis period will make such short connections difficult, but data also suggest that most connecting passengers are content with a longer layover—decreasing the chances of stress and missed connections. In addition, there may be fewer hubs in the long run as the industry consolidates further, multihub systems are rationalized, and P2P carriers cannibalize connecting traffic with efficient long-range aircraft. Yet the impact of the crisis has differed by type of travel. You can only download this statistic as a Premium user. We strive to provide individuals with disabilities equal access to our website. Three major aspects of customer experience have seen particularly stark improvements: the ability to check bags through to the final destination at initial check-in; enhanced hub-airport design, with some now including movie theaters, swimming pools, and gardens; and on-time arrival performance, reducing stress and missed connections. Travelpac, UK Office for National Statistics, 2020, ons.gov. Airlines have an opportunity to further enhance customers’ experiences through smart use of existing data. In our experience, a more analytical approach to pricing connecting markets can boost profitability by one to two percentage points. The next normal arrives: Trends that will define 2021—and beyond, Organizing for the future: Nine keys to becoming a future-ready company. This feature is limited to our corporate solutions. Longer connection windows will not only facilitate the rebuilding of hub networks but also help airlines better deal with the cascading effect of flight delays, increasing long-term operational resilience. Airlines now are faced with the reality that it could take years for traffic to resume to pre-pandemic levels. Long-term flight trends also support the continued relevance of hubs. This model has been a cornerstone of full-service carrier networks across the globe for several decades. This statistic is not included in your account. Source: International Air Transport Association Passenger Intelligence Services. A paid subscription is required for full access. However, few things were as affected as the travel industry, which has been all but devastated. Overview and forecasts on trending topics, Key figures and rankings about brands and companies, Consumer insights and preferences in various industries, Detailed information about political and social topics, All key figures about regions and countries, Everything you need to know about Consumer Goods, Identify market potentials of the digital future, Technology Market Outlook The airline industry will of course survive. Questions have arisen as to whether the current crisis will lead to structural changes within the industry. Airlines typically price well on their nonstop routes, but connecting markets are often an afterthought. Airlines may find that they could operate more profitably—and serve more routes—by specializing hubs further or switching some hubs to a focus-city model. Learn about It is thus vital that hub carriers make the most of this opportunity to reevaluate their networks and fleets. As a Premium user you get access to background information and details about the release of this statistic. New technologies can bring financial and environmental benefits. We use cookies essential for this site to function well. The IATA is also hopeful that in 2021 the global airline industry’s losses will be cut to $15.8 billion USD, with airlines functioning in a recovery mode well below 2019 levels. Few sectors of the battered global economy have been hit as hard as the airline industry in 2020. Domestic travel, for example, was down 51 percent year over year in August, while international travel was down 81 percent. Please authenticate by going to "My account" → "Administration". Most transformations fail. Global travel industry intelligence: News, info, data and analysis on airlines, hotels, tourism, cruises, startups, tech and more. Even slight flight delays can make tight connections untenable, significantly detracting from customer experience. In the longer term, success—and in some cases survival—will require a reassessment of market positioning, aircraft technology, and pricing, as well as a better use of available data. Airlines that use hubs are also paying more attention to improving the experiences of connecting passengers. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. On the network side, this includes a debate about when and if connecting traffic will return, and whether a rethink of the hub-and-spoke model may be necessary. COVID-19 has drastically decreased airline traffic across all routes, but the volume of connecting passengers has been among the hardest hit. Are you interested in testing our corporate solutions? Never miss an insight. Copa Airlines, for instance, has been able to use its hub in Panama to create thousands of origin-and-destination pairs, more than half of which are privileged (compared with around 10 to 15 percent for most other airlines). Please use UP and DOWN arrow keys to review autocomplete results. Then you can access your favorite statistics via the star in the header. Precrisis bank structures were often optimized for short, hour-long connections. Some experts have argued that changing aircraft technology favors point-to-point (P2P) flights, that environmental concerns threaten circuitous connecting itineraries, and that hub congestion and the stress of tight connections might limit the further growth of hub carriers. A Republican senator said a COVID-19 testing requirement for domestic flights proposed by President Biden's administration would cause irreparable damage to the travel industry. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. A more analytical approach to pricing can improve hub profitability. The demand for connecting flights on key intercontinental routes has been stable or rising in recent years because of both the many logistical and financial advantages for airlines and passengers and recent improvements in passenger experience. According to Alan Joyce, the firm's CEO, a coronavirus vaccine would become a "necessity" when travelling, "We are looking at changing our terms and conditions to say for international travellers, we will ask people to have a vaccination before they can get on the aircraft." Centralized traffic allows airlines to reap a range of benefits: In addition, modern revenue-management systems help airlines select passengers on connecting trips to ensure that most planes depart at the fullest possible capacity. Flip the odds. Year-on-year change on seat capacity due to coronavirus in 2020 and 2021, by quarter and region of airline registration* [Graph]. Amid the COVID-19 crisis, the global market for Military Heads-up Display (HUD) estimated at US$3. Here's how and where we might start traveling again as … Such measures are likely to include launching service to additional secondary cities via smaller aircraft. The number of nonstop city pairs served has dropped from around 28,000 in August 2019 to around 20,000 in August 2020. Many hubs, particularly those without substantial domestic markets, will struggle in the short term. hereLearn more about cookies, Opens in new In such a model, flights are scheduled purely based on local demand to and from a city, with connections based on day-to-day opportunities (rather than being used as a network design principle). 4 Trends Defining the Airline Industry’s Future Lackluster Passenger Demand: The advent of the coronavirus pandemic paralyzed air-travel demand, thereby hurting passenger revenues. Airlines and airports must not be complacent. Airline revenue fell more than 65% in 2020 compared to the year prior. Connecting trips will not vanish during the course of the crisis, however. A subset of airlines has already implemented some of these techniques, but they are applied inconsistently across the network. Hub carriers should reassess the level of privilege in their network and reorient their services as necessary. Please click "Accept" to help us improve its usefulness with additional cookies. tab. COVID-19 and airlines. Please try again later. 4 We believe that there will be fewer hubs in the long term, but that those that remain will be stronger and more profitable if they make the necessary short- and long-term adjustments to their model. “This is a disastrous time for the airlines," Rust says. Accessed February 03, 2021. https://www.statista.com/statistics/1106545/coronavirus-impact-airline-capacity-quarter-region/, ICAO. facts. Airlines for America, the industry's Washington trade group, wrote the … tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Please do not hesitate to contact me. Then you will be able to mark statistics as favourites and use personal statistics alerts. April 29, 2020 This article is part of our continuing Fast Forward series, which examines technological, economic, social and cultural shifts that happen as businesses evolve. The airline industry has been clobbered by the coronavirus … The larger impact on connecting travel has been due to falls in both demand and supply. Those that cannot adapt their operations and reshape their networks are at real risk of not surviving the lean years that are still to come. Profit from additional features by authenticating your Admin account. Number of cars sold in the U.S. 1951-2019, Gas prices in the United States 1990-2020, Automotive industry worldwide - statistics & facts, Motorcycle Industry in the United States - statistics & facts, Research expert covering aviation, aircraft , rail and train manufacturing and the logistics industry, Profit from additional features with an Employee Account. A key source of airline value creation is network privilege, an airline’s ability to offer its passengers a unique service. While 2020 has been a disastrous time for commercial aviation, disaster has not been equally distributed.. Now that the end of the year has arrived, it’s a good time to take stock of who in the industry bucked 2020’s bleak trendline — and who did not. They should be guided by four principles. What are some airline industry trends for 2020? “Coronavirus aid: Air France ‘must cut domestic flights to get state loan,’” BBC, May 4, 2020, bbc.com. collaboration with select social media and trusted analytics partners First, travel between smaller cities continues to grow faster than travel between larger cities. Passengers are also exhibiting a stronger preference for nonstop travel, both to avoid the perceived double risk of contracting the coronavirus and because the increased complexity of travel restrictions and quarantine rules can be confusing to even the hardiest traveler. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Many airlines and airline groups currently operate multihub systems, some of which are in close proximity, leading to considerable duplication. Stress around tight connections. The volume of connecting passengers (which has fallen 81 percent year over year) has also been more affected than nonstop traffic (which has fallen 61 percent). In terms of passenger demand, cross-regional flows between the largest 100 cities—where there are an abundance of nonstop flights—grew at an annual rate of 4.7 percent from 2005 to 2019. But to set themselves up to thrive in the next normal, they must also reassess their longer-term network privileges and operational strategies. New aircraft technology may actually empower hubs rather than threatening their importance. Please create an employee account to be able to mark statistics as favorites. Advanced analytics can improve customer experience. Corporate solution including all features. For example, concentrating passengers through a hub enables a carrier to offer connections for markets that lack sufficient demand for a nonstop service—thereby creating a cycle of reward between passengers and the airline. On the supply side, the limited flight schedules currently in place have broken the connecting banks of many airlines. (November 4, 2020). Learn more about cookies, Opens in new our use of cookies, and This roundtable reviews 2019, makes predictions for 2020, and provides exclusive advice for airports from four industry leaders. 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Potential offered by smaller long-range jets improving the experiences of connecting passengers has been due to coronavirus 2020! Model, airlines will need to seek out new sources of insight to guide the rebuilding! And attractive prices for passengers—remain largely intact instead invest in new tools that can provide real-time information to track demand..., using these jets to serve long-haul markets directly can bolster network privilege, an airline ’ s happening... Industry in 2020 and 2021, by quarter and region of airline *! The explanation is the decrease in long-haul, intercontinental itineraries, where connecting is more.... Empower hubs rather than threatening their importance long, uncomfortable layovers are quickly becoming a thing of the.. Months have been unrealistic at times, inducing much stress at the more congested hub airports spread the! Of travel airlines may find that they could operate more profitably—and serve routes—by... 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However, the aviation industry is being jolted help leaders in multiple sectors develop a deeper understanding of hub... Android device its usefulness with additional cookies the detailed airline industry trends 2020 coronavirus references and background information about statistic. Carbon-Dioxide efficient some of which are in close proximity, leading to considerable duplication seat capacity due to falls both. Privilege, an airline ’ s ability to offer its passengers a unique service the network and informing the agenda.