When pharmaceutical companies announced in November the promising results of their Covid-19 vaccines, airline shares around the world soared. But that may have been premature; it will take more than a vaccine to rescue the industry. The pandemic has laid bare the structural problems of airlines, and it is apparent that the crisis is deeper than the collapse in passenger numbers in the last 10 months. The industry needs a deep rethink and radical pivot. It is often noted (albeit not entirely correctly) that the Chinese character for crisis is an amalgam of “danger” and “opportunity”. There is, to be sure, danger all around, but airlines may not like the opportunity. If they survive, most will no longer look like the carriers of even a decade ago.
The pandemic is the catalyst that will bring – must bring – overdue changes to the aviation sector. This begins with the very idea of what an airline should be. The notion of a flag carrier is an outdated leftover from a different era. It’s time to bury it.
Flag carriers were a luxury tolerated by the taxpayer, but there is no money to spare today; not in a crisis that is the Great Depression and the Spanish Flu rolled into one.
This system enables flag carriers to maintain a lucrative monopoly over heavily trafficked routes and ensures that competition is left to a minimum. Now, after the economic hit and government treasuries’ fiscal crisis from Covid-19, it’s finally time to move beyond this model and open up more routes under airlines’ “fifth-freedom” right – one of the rights of airlines under the Chicago Convention of 1944.
Like it or not, the aviation industry is changing due to Covid-19. In fact, the pandemic has accelerated airlines’ crisis. To address this, the industry must focus on removing outdated barriers to global carriers. Without this, airlines will end up with all danger but will miss out on the opportunities.
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