"This is SARS, 9/11 and the Iceland ash cloud all rolled into one." The global travel industry has been dealt a blow by the ongoing impact of the coronavirus pandemic, but few sectors have been affected as dramatically as airlines. Why?
Airlines are a fixed cost industry and now they are under fixed cost pressures which means they are burning through cash everyday while aircraft remain grounded.
That being said, our industry is a resilient one, and we’re confident of its survival as the world starts to recover from the impact of Covid-19. We look at some of the biggest challenges aviation has faced over the past decades, how these have shaped the industry for the better and how we will emerge from the crisis, a changed but adaptable industry.
Oil crises: 1970s & 1990s
1970's Oil Crises: The Yom Kippur War and Iranian Revolution
The oil price shocks of the 1970s were caused Middle-Eastern conflicts. The 1973 Arab-Israeli War (Yom Kippur War) saw oil supplies to North America and the UK among other states supporting Israel completely cut off for months. This led to a sustained gas shortage in the west and massive inflation of oil prices. Then after the Iranian Revolution in 1979, oil prices rocketed once again to around $132 a barrel in today’s currency.
At a time when air travel was still considered a luxury for most, passenger numbers plummeted due to the inflated ticket prices driven up by the cost of fuel. It saw several carriers into bankruptcy and it took around four years for carriers in Europe and North America to return to profitability.
These challenges however inspired the quest for fuel efficiency. This first came through weight reduction measures such as less paint on aircraft liveries and fewer in flight reading materials.
Flight management systems for aircraft were developed to calculate the optimal engine power and speed settings based on factors such as weather (wind) and altitude, to reduce fuel consumption.
This also paved the way for the most significant shift in aircraft construction since the 1930s - as transition away from dense materials to lightweight aluminum for airframes. The exploration of the potential of composite materials that were stronger and lighter continued and the first composite commercial jet entered mass production in 2009: the Boeing 787 Dreamliner.
Impact on the industry: Soaring oil prices led to overpriced tickets & a large drop in passenger numbers.
Changes made: After the crisis, a drive towards fuel efficiency began for airlines & manufacturers. Aircraft fuel burn has reduced 45% in the last 40 years.
1990-1991 Oil crisis of the Persian Gulf War
The Persian Gulf War in the early 90s caused another oil price shock and combined with the growing fear of terrorism and economic recession, even those who could afford expensive flights canceled their airline tickets en masse.
Even the elites stayed home, missing international film premieres, fashion shows and opening nights at the theatre. Many global companies banned business trips replacing face-to-face meetings with clunky video conferencing.
The result was that all major European airlines like British Airways and Air France suffered huge drops in passenger numbers. Traffic at London Heathrow, the world’s busiest airport, decreased by 21 percent.
The impact of the war was tough but relatively brief, traveller fears were alleviated and so global travel bounced back within the year. It also encouraged people to explore new destinations. The conflicts led the Middle East and North Africa to become naturally less popular and so tour operators marketed lesser trodden destinations such as Sri Lanka, the Seychelles and New Zealand.
Short stays also became more popular - lower incomes and high prices on long-haul flights led to the uprising of short-term tourism trends.
Impact on the industry: Fear of terrorism and recession had a large impact on passenger numbers for a short period.
Changes made: Travel habits were changed and new destinations became more popular. Airlines opened many new travel routes.
The 9/11 terrorist attacks
Before now, the 9/11 attack on the World Trade Center in New York was considered the most catastrophic event in air travel history. All commercial airlines in North America were halted for three days. The tragedy spread an unprecedented fear of flying. In the aftermath, both American and European airlines lost billions and some declared bankruptcy. British Airways abandoned its Concorde programme - around 40 of its major customers tragically worked in the World Trade Centre and died in the attack. It took around two years for flying to return to pre September 11th levels.
The world after 9/11 had its own ‘new normal’ - and it was all about security. On board, this involved the addition of reinforced and bullet proof doors and passengers were no longer able to enter the cockpit flight - a treasured moment many of today’s pilots may have recalled as a child.
Many consider going through airport security a pain, but it was these tough and necessary measures that meant the airline industry was able to persuade people fairly quickly that these made travel safe - and it restored passenger confidence.
Impact on the industry: Large drop in passenger numbers due to loss in confidence and a fear of repeated attacks.
Changes made: Large scale changes in security both on board and in the airport. This eventually led to a return in passenger confidence that took around two years.
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