London Daily

Focus on the big picture.
Wednesday, Jul 29, 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
Trump says Israel ‘would not survive’ without US
France Evacuates Atlantic Coast Resorts as Wildfire Risk Rises Again
Magnitude 7.1 Earthquake Strikes Kumamoto as Rescuers Search Collapsed Buildings
OpenAI Faces Demands for Full Disclosure After Models Breach Hugging Face
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
Royal Collection Trust Income Falls as Palace Visits Retreat From Record Highs
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Ministers Examine Social-Care Levy as Burnham Seeks Funding Settlement
UK Attractions Sector Forecast to Add £587 Million in Visitor Spending
England Coast Path Extends With New Suffolk Estuary Walking Route
Attorney General Wins Longer Jail Term for Fatal Dangerous Driving Case
Andrew and Tristan Tate Remain in U.S. Custody Pending UK Extradition
Royal Fleet Auxiliary Workers Secure Above-Inflation Pay Deal
Prime Minister Seeks Cross-Party Agreement on Social Care Reform
Court Upholds Competition Ruling Against Drugmakers Over Hydrocortisone Prices
UK Unveils Major Technical Education Reform for Secondary Schools
UK Judge Rebukes Home Office Over AI-Generated Errors in Asylum Case
UK and Ukraine Agree to Share Electronic Warfare Technology
Apple Briefly Crosses Five Trillion Dollar Valuation as Investors Retreat From AI Bets
Badenoch Offers Tory Votes to Keep Serious Offenders in Prison
Why Americans Queue for $15 Ice Cream and a $100 Caviar Pint
Another AI Genius Left the United States — and Silicon Valley Is Starting to Worry
Shein Reports $99mn Loss as Trade Barriers Test Low-Cost Model
CXMT Gains 466% in China’s Biggest IPO Since 2010
Amazon Seeks Approval for 5,105-Satellite Mobile Network
Burnham Puts School-to-Work Reform at Centre of Welfare Strategy
Johnson & Johnson Agrees to $5.5 Billion Talc Lawsuit Settlement
EU AI Act Shapes Global Corporate Standards, Study Finds
UK-Japan Relations Expected to Deepen Under Burnham Government
Burnham Signals Tough Decisions on Council Tax Reform
UK Inflation Slows to 2.6% in June
Bank of England Holds Interest Rates at 3.75%
Prime Minister Burnham Opens Talks With Business Leaders on Economic Growth
Government Launches 'Number Ten North' to Drive UK Devolution
Labour Regains Poll Lead After Burnham's First Weeks in Office
Prime Minister Burnham Rules Out Early UK General Election Before 2029
Burnham Rules Out Replacing Council Tax and Stamp Duty
Fresh Heatwave Threatens to Rekindle France’s Historic Wildfire Crisis
The Burnham government is seeking to establish its credibility through ambitious social care reform while maintaining fiscal discipline and public confidence in the National Health Service. Labour's early improvement in opinion polls provides political momentum, but sustained support will depend on delivering tangible policy outcomes. Britain continues to reinforce its role in European security through long-term support for Ukraine, while climate-related risks, including increasingly severe wildfires across England and Scotland, are becoming a more prominent national resilience challenge alongside economic uncertainty.
United Kingdom Economy Remains Exposed to Global Energy Risks
Prime Minister Dismisses Calls for an Early General Election
Scottish Wildfires Continue to Stretch Emergency Services
United Kingdom Faces Rising Wildfire Risk as Heatwave Continues
Lower Oil Prices Ease Inflation Concerns and Support Financial Markets
Financial Conduct Authority Launches Consumer Campaign on Car Finance Compensation
Government Prioritises Employment Over Benefit Cuts in Welfare Reform Plans
Prime Minister Rules Out Sweeping Property Tax Changes Before Autumn Budget
AstraZeneca Beats Expectations as Cancer Medicines Drive Strong Profit Growth
Labour Regains Narrow Polling Lead After Burnham's First Week in Office
United Kingdom Reaffirms Long-Term Commitment to Ukraine Under Burnham Government
×