Macroeconomic & Geopolitical

Commercial Aviation Market Improving, Recovery Time is Uncertain

July 2020 – 2 min read

While the length and depth of this crisis remain uncertain, industry insiders are confident in aviation’s resiliency and ability to recover.

The COVID-19 pandemic has had a severe impact on the commercial aviation market, with simultaneous government travel restrictions and stay-at-home orders across much of the world effectively grounding the global aircraft fleet. Although the aviation industry has recovered from prior pandemics and exogenous shocks, such as 9/11, SARS (2002–2003) and the Great Financial Crisis (2008–2010), the commercial aviation industry is facing what may be the most challenging period in its history. While the length and depth of this crisis remain uncertain, industry insiders are confident in aviation’s resiliency and ability to recover. Nevertheless, the COVID-19 pandemic will reshape the industry for years to come.

There have been some positive developments during the the month of June. In the U.S., domestic flights are gradually recovering, with TSA reporting increasing passenger volumes at approximately 15% of the prior year, compared to 6-8% volumes a month ago. In Europe, domestic flight travel is also improving, with volumes at 40% of the prior year, compared to 20% in May. In China, domestic flights are now at 80% of the prior year, compared to 60% a month ago. In the finance markets, the U.S. capital markets have reopened for stronger airlines, with Southwest Airlines and Delta recently issuing a combined $3 billion of unsecured debt. On the negative side, the resurgence of COVID-19 cases in the southern and western regions of the U.S. and the travel ban imposed by the E.U. on travel from the U.S. may slow the pace of recovery.

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George Stone

Managing Director

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