Pandemic storm ahead for airlines

It starts to become clear now, as we watch the latest round of border closures, that international travel may never go back, in our lifetimes, to where it was before Covid-19.

For sure, earlier this week, it fell to me to find flights for someone from the UK to Slovakia. The flights are still allowed. Yet my flight search engines, normally filled with hundreds of options in a ladder of pricing, returned a bunch of messages all the same, apologising for being unable to find any combination of flights at all between the two destinations, or from Austria, or to bigger UK airports.

I presumed the engine must have stopped working and tried others. But the problem was the flights.

For travelling now — as a client of mine related after getting to Kenya from the UK for a trip driving a commercial real estate development — is an endurance test of back-up plans, with flights that get cancelled, regulations a moving target, Covid tests and multiple certificates to organise, and now, sometimes, last-minute announcements of compulsory ‘paid-for’ hotel quarantines. One wonders what happens to the people who literally do not have that extra Sh200,000 to hand.

For sure, no-one wants to be the person who carries a new variant into a new nation as the latest super spreader, which makes all the precautions completely understandable. But now the flights are stopping even where they aren’t banned, as people are deterred from trips they previously thought essential. Yet, with apparently thousands of pilots and airline staff now fired and planes grounded or flying near-empty, there is a silence around the closure of airlines — I even saw one jolly journalist speculating that we were due to see share prices surge for airlines as flights came back on.

A possibility more real is that with government and public sector borrowing having ballooned everywhere in the world, thereby taking up a greater proportion of the globe’s available loan capital, many airlines will go under in the months and year ahead. Unable to borrow enough, or service the loans to cover their ongoing costs for their year on the ground, or fund their ramping up costs to start flying again, closure will be their only route.

In fact, even after the first round of lockdowns, we saw key airlines selling off assets, some as memorabilia and quirky collection items, as the metal boxes airline food is stored or warmed in, or first-class napkins, cutlery and crockery — thank you, British Airways. Yet even these trinkets are as nothing to the global bulge ahead in long-haul planes for sale.

Nor are there multiple uses for airliners, apart from for flying. They don’t lend themselves, as shipping containers do, to use as homes and offices, although, count on it, in years to come, someone will convert an old airliner into a home.

Certainly, as all those planes come onto the market, there will be the counter-cyclical investors, who pick up super cheap assets and drive into the space left by the old guard of our international flying. We will see some new airlines and operators built in the fallout. But the more likely outlook in 2021, 2022, and in 2023 too, is far fewer flights from fewer airlines and a lot more trouble getting anywhere internationally, which begins to change our world more again.

In Kenya, we took a nosedive on our horticulture sales when all the passenger flights stopped last year, losing all the plane belly cargo space. Over some weeks, former passenger planes resumed flying carrying cargo on their seats, but the suspension of large cargo lifts anyway left a narrower pipeline for our perishable exports.

And then there’s tourism, with many of our hotels now booked by domestic visitors, but the dropping in millions of arrivals having an impact, nonetheless: if flights now become hard to get for years, and travel prices soar, we won’t be going back to where we began.

The way all this disruption plays out will depend on individuals, the airline leaders, the bank lenders, the entrepreneurs seeking opportunities. But for travellers, virtual may be the new international for now years to come.