London Daily

Focus on the big picture.
Sunday, Jul 19, 2026

Airlines will struggle long after passengers feel safe to fly again

Airlines will struggle long after passengers feel safe to fly again

The Covid-19 pandemic has caused the worst financial crisis in the history of the airline industry. But when the health crisis is over, airlines' financial problems will probably continue for years.

History has shown clearly that it takes a tremendous amount of time for passenger traffic to recover after a recession.

recently, it took a whopping five years after Great Recession ended in 2009 for passenger traffic to recover, according to Philip Baggaley, the chief credit analyst for airlines at Standard & Poors. Even after the relatively mild 2000 recession caused by the bursting of the dot-com bubble, it took until 2004 for US air passenger traffic to again reach its pre-recession peak.

"Recessions are tough for the industry. Airlines are dependent on economic growth," said Baggaley.

Beyond the years it takes for overall air travel to recover after a recession, historically it takes even longer for a return of business travel, which is the most lucrative sector for airlines -- one most of them depend upon.

That's one part of what makes this recession particularly chilling for airlines. On an overall scale the pandemic has caused widespread economic pain, with millions losing their jobs and burning through savings that they might otherwise have used for discretionary spending like vacations.

But when it comes to that all-important business travel, the situation is arguably worse.

Many companies have fewer employees on payrolls with a need to travel. Most will also be trying to recoup losses or pay down debt caused by the pandemic -- and trimming travel by skipping conferences and meeting with clients virtually is likely to be a cost-cutting measure. And, of course, there are many companies that have gone out of business altogether during the crisis.

"Business travel typically falls farther and takes longer to recover," said Adam Sacks, president of Tourism Economics.

Sacks thinks next year's travel will still be significantly affected by the pandemic itself. But he said he believes that in "2022, we're dealing with picking up the pieces from the economy that has been damaged."

"In this case, I think four years [after 2021] is what we're looking at to get leisure travel back to pre-pandemic levels. Businesses will take at least an extra year," he added.

There is no blueprint for a crisis like this. The last pandemic on this global scale was more than 100 years ago in 1918, before the age of commercial air travel.

More recent pandemics -- such as the SARS crisis in 2003, which badly damaged air travel to and from Asia, particularly Hong Kong -- did not cause a global recession. The SARS pandemic was over relatively quickly, and the impact on air travel ended only six months later, Sacks said, as people felt safe flying again.

What airline executives are saying


In this pandemic, US airlines collectively lost $12 billion in the second quarter. So far for the third quarter the five largest carriers -- American (AAL), United (UAL), Delta, Southwest and Alaska Air (ALK), have already reported losses of $8.9 billion excluding special items like $25 billion in federal assistance for the industry overall.

And airline executives have been blunt about their expectations for a slow, painful recovery.

"We have to assume that business travel will be lighter for a long time," said Southwest (LUV) CEO Gary Kelly in an interview on CNBC last week.

He cited examples of business travel taking five years to recover from past recessions, adding, "you've got to believe that will be at least the case now. I've said it may be 10 years before business travel recovers."

The airlines are also concerned about a permanent hit to business travel given growing use of video services, although they say they believe the shift to virtual meetings will be limited.

"I'm of the view that it will have some impact, but it's not going to be a substitute," said Delta (DAL) CEO Ed Bastian when speaking with investors earlier this month. "I don't think anybody knows. My sense is that we could be looking at anywhere from 10% to 20% reduction in the next couple of years when we get to that new normal of business travel."

Most of the financial damage to the airlines so far has been because of a combination of shutdown orders limiting nonessential flying, quarantine rules for travelers and border closings. Travel through US airport checkpoints since March is down 75%.

While those losses may not be repeated -- especially if the vaccines and treatments help to beat back the pandemic sometime next year -- they still have left an industry that went into the crisis in relatively strong financial shape with much weaker balance sheets. All have taken on massive levels of debt to ride out this downturn.

And they've all cut their staff -- through voluntary buyouts and in many cases involuntary layoffs and furloughs -- to reduce costs. If even a modest level of traffic returns next year with an end to the pandemic, the losses could end by the middle of 2021. But that doesn't mean they'll be in good financial shape.

"The airlines may be able to break even again or make modest amounts of money," said Baggaley. "But even if they're able to make money at this lower passenger levels, profitability won't return to previous levels any time soon."

Newsletter

Related Articles

0:00
0:00
Close
Iran Claims It Destroyed Bahrain’s Main Artificial Intelligence Center in Missile and Drone Strike
Brothers Andrew and Tristan Tate Who Turned "Toxic Masculinity" Into a Brand Arrested in Miami as Britain Seeks Their Extradition
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
Key Trends to Watch
Financial Conduct Authority Warns Cloud and Digital Risks Are Becoming a Financial Priority
Jeffrey Donaldson Appeals Sexual Abuse Conviction as Democratic Unionist Party Opens Review
Welsh Health Authorities Launch Emergency Meningitis Vaccination Programme for Students
Scottish Business Activity Falls for Third Month as Companies Face Rising Costs
Bank of England Regulators Demand Better Access to Digital Banking Services
United Kingdom Cuts Bilateral Aid to Several African Countries by Up to Ninety Per Cent
United Kingdom Introduces Tougher Deportation Rules After Rochdale Exploitation Scandal
NHS England Launches Wearable Technology Plan to Reduce Sepsis Deaths
Amazon Web Services Billing Error Sends Trillion-Dollar Invoices to British Companies
Bank of England Takes Direct Regulatory Role Over Major Global Cloud Providers
Extreme Summer Heat Drives Record Fire Risk and Rising Deaths Across Britain
United Kingdom Nationalisation of British Steel Sparks Diplomatic Dispute With China
United Kingdom Economy Shows Weak Growth Ahead of Major Autumn Budget
Andy Burnham Set to Become United Kingdom Prime Minister After Labour Leadership Victory
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
The Monaco Bombing Has Become a Test of Ukraine’s Intelligence Accountability
Leadership Change and Strategic Rivalry Redraw the Political Map
Energy Risk, Uneven Growth and the New Geography of Global Capital
The AI Race Enters Its Infrastructure Era
Security and resilience remain long-term national priorities
Britain balances growth ambitions with public finance pressures
Regional devolution becomes a defining theme of the next Labour era
Industrial strategy returns to the centre of British economic policy
Political Instability Remains a Challenge for UK Investment Confidence
Brexit Economic Debate Continues as Public Concerns Over Long-Term Impact Remain
UK Climate Risks Rise as Met Office Warns Extreme Weather Is Becoming More Common
Housing Shortages and Regional Inequality Become Key Priorities Under Incoming Labour Leadership
National Health Service Reform Remains One of Britain’s Biggest Political Challenges
Bank of England Remains at Centre of UK Economic Debate Over Inflation and Growth
UK Economy Shows Recovery Signs but Households and Businesses Remain Under Pressure
Britain Deepens European Defence Cooperation as NATO Allies Seek Stronger Security Capabilities
United Kingdom Expands Sanctions Against Russian Cyber Networks Over Security Threats
UK Industrial Strategy Faces Test After Government Takes Control of British Steel
British Businesses Seek Policy Clarity as Andy Burnham Prepares to Lead Labour Government
Andy Burnham’s Labour Leadership Signals Major Shift Toward Regional Power and Devolution
British Steel Nationalisation Creates New UK-China Tensions Over Control of Strategic Industry
For 36 Years, He Scammed About 300 Luxury Hotels — Until He Was Caught
England's World Cup Exit Expected to Cost Hospitality and Retail £334 Million
Former ICC Prosecutor Aide Speaks Publicly About Allegations Against Karim Khan
Opposition Raises Questions Over June Heatwave Power Grid Pressures
Mastercard Explores Sale of Majority Stake in UK Payments Operator Vocalink
Boeing Forecasts Global Commercial Aircraft Fleet Will Double by 2045
×