Global effort – Airport World
With international travel still heavily on hold due to COVID-19, restoring road networks and global connectivity will require the effort of all stakeholders who benefit from aviation, writes James Brass of York Aviation.
The past 18 months have been deeply strange for the airline industry. After years of growth and expansion of road networks, government travel restrictions in the wake of COVID-19 have reduced the number of passengers to a net and decimated the road networks.
The impact on the airline industry, the jobs and prosperity it sustains has been profound, with hundreds of thousands of job losses worldwide and unprecedented financial losses. However, this is really only part of the story.
The air connectivity that underpins the functioning of the global economy in terms of trade, investment, knowledge and labor flow currently exists only in skeleton form. By summer 2020, the number of pairs of routes served by airports around the world had fallen by 53% compared to summer 2019, and, although summer 2021 is looking better, with pairs of routes in Only about 26% down on 2019, there is still a very long way to go.
The recovery is also uneven globally, with some regions suffering less and recovering faster (see graph on page 20). For example, Asia and North America, with their large domestic markets, have declined less and are returning more strongly than Europe, where there have been significant second and third waves of COVID-19 in recent months. , and the market is more dependent on the international. Trip.
The economic recovery of cities, regions and countries around the world depends on rebuilding this air connectivity. The Air Transport Action Group (ATAG) estimated that aviation supported $ 3.5 trillion in GDP and 87.7 million jobs globally in 2018.
This estimate included the role of aviation in supporting tourism, which accounted for about $ 1 trillion of the total, but excluded the role of aviation in supporting trade and boosting productivity through investment and support. knowledge flow. If these effects had been included, the impact of the sector would have been considerably higher.
On the other hand, IATA recently estimated that a 10% increase in air connectivity can increase labor productivity by 0.7%, which is directly related to GDP. The impact of individual routes can vary widely, but previous research for the Chicago Department of Aviation has estimated the impact of a typical widebody service at around $ 200 million each year, while research for the Sydney Airport has estimated the benefits of each route to be around A $ 122 million. every year.
This highlights, on a more micro scale, the economic benefits that can be realized through the growth of the road network. These numbers help articulate the “price” that is associated with a true and effective aviation recovery.
How governments and other stakeholders can support this recovery is a multi-faceted question and the answers are ultimately not easy. Different airlines and airports will need different things, and the needs will change over time as the industry rebuilds itself. However, there are fundamental things that governments and other stakeholders can do to help the industry come back.
Globally and nationally, bringing COVID-19 under control, vaccinating populations as quickly as possible and developing effective treatments are clearly essential. Travel resumes, but many restrictions are still in place. Only with COVID-19 under control and with the necessary mitigation measures in place will travel restrictions begin to lift and eventually disappear.
This must be linked to restoring passenger confidence in travel. Governments have a job to do to communicate that it is safe to travel and that people can plan knowing they will be able to travel.
Equally important, governments and others must also continue to financially support the industry as it recovers, by providing liquidity and support to the labor market, so that airlines and airports are able to respond to demands. the pent-up demand that will be released as the restrictions are lifted.
However, these measures are largely taken for granted. It is at the city and regional level that much of the work of rebuilding connectivity needs to be done.
Local and regional governments, economic development agencies, tourism organizations and other stakeholders have a major role to play in rebuilding connectivity and they must act now.
The situation is improving and the recovery is starting. However, the damage to the economies has been massive. Cities and regions face an economic imperative to stimulate economic growth and reconnecting with the world is a key part of this.
For many cities and regions, major air links will either have disappeared or will operate at significantly reduced capacity. It is time to start developing common strategies with their airports to reestablish connections.
Cities and regions also need to recognize that they have entered a period of intense competition around connectivity. A period in which the winners and losers in the race for economic recovery will be defined.
Connectivity has always been a dynamic element that underpins economic growth. The level of connectivity available to businesses in a region where connections to inbound tourism markets have
always needed to keep pace with that available for competing cities and regions.
This has not been changed by the pandemic. The starting point has simply been reset and cities and regions operate from a lower base. The only difference now is that the supply has been reduced, that it is more risk averse and that the economic imperative on competing regions is stronger than ever.
Places where local stakeholders work together effectively and recognize the importance of rebuilding air connectivity will have an advantage as the recovery begins in earnest.
It is not just about throwing money at the problem, not least because money is not necessarily something that is plentiful right now.
Stakeholders need to make interventions that will add value and make a difference in their cities and regions. They should ask themselves the key questions:
- What has been lost and what has been lost that matters?
- What is threatened and what is threatened that matters?
- What connectivity do we need in return or do we need to protect in the short, medium and long term?
- How do we work with our airports to come up with a strategy that works for everyone and offers good value for money?
- Which airlines can provide this to us?
- What kind of support is needed and what can we as stakeholders offer?
- How do we ensure value for money?
Stakeholders may also need to rethink their strategies in supporting airports and airlines to reflect the scale of the challenge of rebuilding after the pandemic.
They may need to consider whether the traditional focus on inbound trade and tourism routes is appropriate in the short term, and whether route support is, in fact, an effective way to help their airports and revive the economy. request.
With road networks so small, it will be important to regain the extent of connectivity. This suggests that restoring the hub’s connectivity may be an important goal for stakeholders in the immediate term.
Stakeholders may also need to consider means of response, perhaps with a greater emphasis on risk sharing, allowing airlines to access support for sets of routes rather than on routes. individual routes, and securing aircraft bases.
Ultimately, aviation will recover. Connectivity will be restored and industry will regain its status as a vital economic engine for cities and regions of the world.
Local and regional actors have an essential role to play in this regard. But conversely, it is also vital that these actors get involved in the recovery process to support the economic recovery of their cities and regions.