Smith Brain Trust / June 18, 2020

How COVID-19 Is Changing the Airline Industry

Seven Trends That Are Reshaping How We'll Travel

How COVID-19 Is Changing the Airline Industry

SMITH BRAIN TRUST – There’s no question about it: Travelers just aren’t flying as much as they used to.

While the number of flight passengers has increased since the lows seen in March and April, airlines don’t anticipate being able to cover flight costs over the coming months. Coronavirus-induced uncertainty is a big reason why.

When people do fly these days, they’re waiting until the last minute to book, according to the International Air Transport Association. This hinders route-planning, further complicating the industry’s recovery. With no federal requirements – but with CDC and WHO guidance, U.S. airlines have independently adopted to varying degrees pandemic sanitation and social distancing measures. And all have adopted mandatory face covering rules from check-in through deplaning both for passengers and employees.

The pandemic’s social distancing norms are tough on the industry, which is designed for and thrives on crowds of people traversing through spaces, in close proximity.

Maryland Smith aviation expert Michael O. Ball leads an FAA-funded consortium (NEXTOR) of eight universities dedicated to aviation operations research. “Obviously COVID-19 already has had a huge impact on aviation,” says Ball. “The pandemic will result in some fundamental changes to air transportation.”

He says the pandemic’s upheaval and the industry’s path forward will be a key focus for the consortium’s research.

Here are some of the big trends facing the airline industry and its passengers now.

RIP middle seat? “The big question is whether the airlines will enforce social distancing onboard, by not filling middle seats,” says Roland Rust, Distinguished University Professor and David Bruce Smith Chair in Marketing at the University of Maryland’s Robert H. Smith School of Business. “My guess, unfortunately, is that when push comes to shove, many airlines will decide that their profits are more important than passenger safety and will seek to pack people in like before. This is less of an issue now, while planes are less full, but as people tire of social distancing, the planes may fill up again, before it really is safe.” It’s impossible to accommodate social distancing without dramatically reducing capacity on flights, he adds, and if airlines try, government regulators could step in.

Arriving (really) early for your flight: The previous guidance on arriving for domestic flights one hour early and international flights three hours early might soon be out the window. In airports, check-in and security processes will need to be redesigned to permit social distancing, Rust says.

Road trip rebirth: Leisure travelers are not convinced that it is safe to fly, says Martin Dresner, chair of Maryland Smith’s logistics, business and public policy department. “Health officials have for several months been telling the public of the importance of social distancing. Travelers realize that this is not possible on aircraft.” This summer, drivable vacation destinations are in vogue, and they could remain that way for some time to come.

Long wait for immunity passports: Immunity passports for air travelers may be possible eventually, Rust says, but not soon. “There are too many bad antibody tests out there,” he says. “Until the antibody tests are accurate, getting a negative result will not give people enough confidence."

Slower recovery: The SARS outbreak in 2003 drove a decline in air travel, particularly across Asia. “In the following year, air travel bounced back,” Dresner says. “The aviation industry was initially hoping for the same response following COVID-19.” But that’s not happening. Airlines now are faced with the reality that it could take years for traffic to resume to pre-pandemic levels. “This is a disastrous time for the airlines," Rust says. "It is notable that Warren Buffett already dumped all of his airline stocks."

Business travel goes from boom to... Zoom: If the current pandemic has taught business executives anything, it’s that most meetings can be conducted online with video conferencing technology. “The bounce back of ‘high-yield’ business travel from the COVID-19 pandemic remains uncertain,” Dresner says.

Higher flight prices: With fewer passengers per flight and some additional safety and disinfecting measures in place, the cost of putting an airplane in the sky is itself gaining altitude. That’s going to price a lot of travelers out of the market. “Many people have had to take on debt during the pandemic as they have been laid off or had their work hours cut,” Dresner says. “Following the pandemic, spare cash may be used to pay down debt and meet mortgage payments, rather than to take a vacation.”



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