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Economic Performance of The Airline Industry

Table of Contents

Introduction.

Research Objective.

Research Questions.

Literature Review..

Research Methodology.

Research Philosophy.

Data Collection Tools.

Data Analysis.

Ethical Consideration.

Limitations of study.

Research Implementation.

References.

Introduction to Impact of Covid-19 on Air Transportation

COVID -19 has caused unparalleled challenges to economies across the globe. The global economy will be contracted by 5.2 %, for the year 2020 while the per capita income of the advanced economies will decline by 7% and a steep decline in the unemployment rates (World Bank, 2020). The government took the necessary steps to curtail the transmission of the spread of the virus. As a measure countries across the globe banned air transportation both domestically and internationally. The effect of the COVID-19 pandemic and the measures to stop the transmission were not just limited to the health sector but impacted all the sectors across the economy, air transportation was no exception. The airports witnessed a reduction in global passenger traffic by 28.4% in the first quarter of the year 2020 that is approximately 612 million fewer passengers (ICAO, 2020). In the current scenario, the air transportation industry is striving to recover from the losses incurred due to the ongoing pandemic. The purpose of this research paper is to explore and analyze how the ongoing COVID -19 pandemic has impacted the global airline transportation. The research paper will also provide an explanation for how the COVID-19 has led to a decrease in the revenue, an increase in the cost, a rise in the unemployment rate, a decrease in the number of passengers, and the road ahead for the air transportation. COVID-19 had an unanticipated effect on the livelihoods of people; the effect on airline transportation is profound, however, there is not enough literature available that discusses how all these elements of the airline industry is impacted, this is the main reason why I selected this topic for my research. This field of research is new as well as not widely explored, thus will become a base or provides a framework for future studies on this topic.

Research Objective

Research objectives can be stated as all the elements that the researcher wants to present and bring into the light. The research objectives are:

  • To understand the air transportation industry
  • To understand how the supply chain is affected by fluctuation in air transportation
  • To elucidate the effect of COVID -19 on the elements of the airline industries namely; revenue, cost, number of passengers, Unemployment, and growth prospects.
  • To study the impact of the COVID -19 on air transportation.

Research Questions

The research questions are associated with the aim and objectives of the research paper. The research questions are:

“How air transportation is affected by the COVID-19 crisis? “

  • What are the problems faced by the air transportation industry due to the crisis?
  • How is the Supply chain impacted by changes in air transportation?
  • How the COVID – 19 has impacted the revenue, cost, number of passengers, unemployment, and future growth prospects of the air transportation industry?

Literature Review of Impact of Covid-19 on Air Transportation

The literature review summarises the important information about the topic that the researcher is seeking to investigate (Ravid & Efron, 2018). It helps to establish the connection between work done by other researchers and promotes finding new ways to analyze the earlier researches. For this study, a systematic review will be apt as the emphasis is on analyzing existing evidence for the research topic, it uses standardized methods to find and critically analyze the studies (Ravid & Efron, 2018).

Air Transporation aids in the smooth movement of goods, people, technology, capital as well as ideas and over the years has promoted global economic development. Not only supports the movement of people but is an important tool for international trade. Moreover, there are many industries that are allied with air transportation industries, as a result, it provokes employment to numerous people. It plays an important role in boosting tourism as well as trade. The airline industry was a source of huge government revenues. In the last decade, the airline industry contributed an average tax revenue of approximately $111 billion per year (IATA, 2020).

The air transportation demand has been remained high throughput this decade, in the year 2018 the revenue passenger kilometers rose by 7.4%, this was due to strong global economic conditions and high competition in the airline industry which promoted affordable price of air tickets for the travelers (IATA, 2019). China contributed to the highest number of passenger journeys domestically followed by the United States and India in 2018 (IATA, 2019). In the year 2019, the revenue passenger kilometer increased by 4.2%, however, it is expected to fall by 54.7% for the year 2020 (IATA, 2020). The world trade growth rate rose by 3.7% in 2018 (IATA, 2019), 0.9% in 2019 however, it is anticipated to fall by 12.9 % in 2020 (IATA, 2020). The value of international trade was6,754 ($billion) in 2018, (IATA, 2019), 6,504 ($billion ) in 2019 which is likely to fall to 5.543 ( $billion) in 2020 (IATA, 2020). Moreover, the tourist traveling by air was increasing by 10.3 % in 2018 (IATA, 2019, 7.1 % in 2019 but is forecasted to fall drastically by 49.3% in 2020 (IATA, 2020). The airline industry provided employment opportunities to 70.4 million jobs in 2019 and is expected to reduce to 38.4 million in 2030, approximately 45% downfall (IATA, 2020).

The airline industry has endured many shocks throughout history but no shock was of the level the COVID-19. The major brunt of these shock was on the employment and it soon to get worse considering the expected fall in capacity by 60 % - 80% (Sobieralski, 2020). There is no fixed timeline for easing of the social distancing as well as travel restrictions, this has increased the uncertainty for this sector (Sobieralski, 2020). According to a study by ICAO (2020), the seats offered by airlines are expected to fall between 47% to 52%, in absolute terms the contraction will be between 2,603 and 2,907 million passengers. The industry will witness a loss in gross passenger operating revenues of the airline by USD 355 billion to 392 billion (ICAO, 2020).

Research Methodology of Impact of Covid-19 on Air Transportation

The inductive approach comprises finding a pattern in the gathered observations as well as theories (Preston, 2014). The approach tries to generate meanings to the information collected so as to find out a pattern and to establish a theory. The movement is towards the generalization of a conclusion from an observed data set (Preston, 2014). It is best suited for this study.

Research Philosophy

Epistemology is the branch of philosophy that is associated with the possibilities, scope, sources as well as limitations of the knowledge of the research topic being undertaken.

The positivism approach is best suited for the quantitative methodology to research. The positivism paradigm undertakes a scientific approach to research and promotes the usage of quantitative methodology (Mukherji & Albon, 2015). The positivism paradigm approach mainly deals with major practical problems and tries to a causal relationship using statistical analysis.

 The objectives of the quantitative methodology are to determine measure and analyze the extension of a particular phenomenon. The emphasis of this type of research approach is highly on data, information, and associated rational considerations when used can enhance knowledge (Mukherji & Albon, 2015).

In this study will be using the quantitative data since for finding the impact of the COVID – 19 on global air transportation the factors that will be considered are the number of people employed, the revenue of the industry, number of passengers, the cost to the industry, unemployment and future growth prospects.

Data Collection Tools

Data collection is a systematic process through which the data is gathering on the selected research topic. The data collection method can be divided into two categories: primary data and secondary data. For the research study, secondary data will be used.

The secondary data will be more suitable for this study as the data will be collected from various studies, surveys as well as undertaken experiments that are already conducted by other researchers or institutions and are published (SAGE, 2012). It will be more cost-effective and will save time as compared to primary data. The data collection tool will be online sources that will include books as well as journals as well as other official websites.

Secondary quantitative data collection tools will be used that will include gathering data from the media and press releases of the government and other credible institutions. Scholarly resources will be used for developing the structure so as to associate the topic of the research with the question of the research. Scholarly resources include academic, referred, or peer-reviewed sources which are written by various experts in the domain (Illinois University Library, n.d.)

Data Analysis

Data analysis is the procedure to derive substantial and relevant information about the undertaken study from the data which is acquired through various secondary sources. The data will be analyzed so as to reach the conclusion. In order to analyze the data that we gathered using secondary sources, a descriptive statistical technique of analysis is appropriate. The emphasis will be on putting into use the existing information and finding information that either supports or rejects the problem statement that is set at the initial stages of the research process. The descriptive analysis will provide the association between the variables that are selected for the study (CYFAR, n.d.). Descriptive analysis is more helpful here as this research area is relatively new and mainly unexplored. The findings that will be obtained from the sources and after analyzing the data will be presented in the form of tables and will be presented through bar graphs and pie charts.

Ethical Consideration

It is important for the researcher to take into consideration the ethic for developing the research paper. For the purpose of writing the research paper, the data used is authentic and is taken only from reliable sources. Moreover, the specific terms and conditions associated with the specific data source of the platform were given high priority. All the provisions for allowing research usage of the data gathered are considered while writing the research paper. Plagiarism is misconduct, a great emphasis is provided so as to provide references for data which is obtained from various resources.

Limitations of The Study

Every study has a limitation to it, these limitations arise because of the constraints on the research methodology or other factors that could impact the findings of the study. The plausible limitation of this research study is related to the literature review section. It is a new research topic, there are hardly any prior studies on this topic. The research studies that are available are limited. Moreover, the access to the data available is limited since this is an ongoing pandemic and the actual results may differ from the forecasted results. Moreover, time is also a constraint as the deadline for submitting the research paper is fixed and huge data needs to be analyzed to make the study more reliable.

Reaserch Implementatuin

The implementation of the research will be shown through the Gannt chart. Gant chart includes the expected time that would be required by the researcher in each of the activities associated with the research. It includes all the sections that will be part of the actual research and the expected time taken to complete that section so as to reach a conclusion. The expected time required is 7 weeks. There will be 5 chapters; the first chapter will be for introduction, the second will be for collecting the data, the third chapter will be for the analysis, the fourth chapter pertains to finding and discussion and the last will be for the conclusion.

Gantt-Chart

Chapters/Time

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Chapter 1

             

Chapter 2

             

Chapter 3

             

Chapter 4

             

Chapter 5

             

References for Impact of Covid-19 on Air Transportation

CYFAR. (n.d.) Analysis of quantitative data. Retrieved from Inc. https://cyfar.org/analysis-quantitative-data

IATA (2019). Economic performance of the Airline industry. Retrieved from https://www.iata.org/contentassets/36695cd211574052b3820044111b56de/airline-industry-economic-performance-dec19-report.pdf

IATA (2020). Economic performance of the airline industry. Retrieved from https://www.iata.org/en/iata-repository/publications/economic-reports/airline-industry-economic-performance-june-2020-report/

ICAO (2020). Effects of novel coronavirus (COVID-19) on civil aviation: Economic impact analysis. Retrieved from https://www.icao.int/sustainability/Documents/COVID-19/ICAO_Coronavirus_Econ_Impact.pdf

Illinois University Library ( n.d.). Determine if a source is scholarly. Retrieved from https://www.library.illinois.edu/ugl/howdoi/scholarly/#:~:text=Scholarly%20sources%20(also%20referred%20to,research%2C%20findings%2C%20and%20news.

Mukherki, P. & Albon, D. (2015). Research methods in early childhood. Los Angeles. SAGE Publications

Preston, T. (2014). How to figure things out: inductive reasoning versus deductive reasoning. United States: Create space Independent Pub.

Ravid, R., Efron, S. E. (2018). Writing the literature review: A practical guide. United Kingdom: Guilford Publications.

Sobieralski, B. J. (2020). COVID -19 and airline employment: Insights from historical uncertainty shock to the industry. Transportation Research Interdisciplinary Perspectives, 5. https://doi.org/10.1016/j.trip.2020.100123

World Bank. (2020). During the COVID-19 pandemic: A changing world. The Global Economic Outlook. Retrieved from https://www.worldbank.org/en/news/feature/2020/06/08/the-global-economic-outlook-during-the-covid-19-pandemic-a-changed-world

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