With millions of people cancelling pre-booked vacations and businesses opting for Zoom meetings over in-person travel, the aviation industry suffered extreme financial losses due to the COVID-19 pandemic. The economic toll continues to climb and may reach an estimated $300 billion dollars across the world, based on American currency.
How Airlines Have Reacted to Pandemic Upheaval
Numerous aircraft carriers have made significant spending cuts since the start of the pandemic, leaving them with little liquidity. Nervous investors reacted to travel bans and lockdowns by delaying investments or diverting their funds elsewhere. Considering that 2020 was one of the worst years in airline history, this does not come as a surprise to most people.
The good news is that confidence in the airline industry is returning with the COVID-19 vaccine rollout earlier this year, causing many countries to lift travel restrictions. People are booking international flights again, and in-country flights may soon reach pre-pandemic levels. Bhanu Choudhrie of the Alpha Aviation Group feels these actions give the aviation industry and investors reasons to be hopeful.
Alpha Aviation Group is a UK based company that was founded by Bhanu Choudhrie, a British-Indian entrepreneur in 2006. Alpha Aviation Group provides improved solutions for aviation training. The company’s primary services include type ratings and cadet programs tailored to meet the operational needs of the client airline.
Despite the uncertainty surrounding the post-pandemic economic recovery, Choudhrie feels that now is an ideal time to invest in the aviation industry. He also stresses the importance of capital investments returning to the industry to ensure that it will become even stronger than it was before the pandemic.
Aviation Remains a Vital Part of the Worldwide Economy
Bhanu Choudhrie acknowledges that airline travel itself contributes only a small portion towards the Gross Domestic Product (GDP). However, its links to downstream and upstream sectors are what matter the most. He urges investors to act now to help get the industry out of a state of limbo and allow it to support the other sectors that depend on it.
The mobility of society is one of its most important socio-economic constructs because it enables people to gain access to a wide range of products and services across the globe. Other forms of transportation, such as long-haul trucking and delivery by ship, are also essential forms of transportation in a mobile society. Despite this, aviation stands alone for its ability to provide global transportation, facilitate international trade, create jobs, and stimulate economic growth.
The United Kingdom alone has endured a blow to the national economy of £271 billion, one of the worst recessions in the country’s history. Unfortunately, the UK is far from the only country to release such devastating news. The aviation industry stimulates economic growth on a global scale; without it, production and distribution around the world literally come to a halt. Choudhrie makes this point again to reiterate the crucial need for the aviation industry to receive investor support that will enable it to operate at full strength again.
Reasons for Optimism in the Aviation Industry
Several airlines have introduced new purchases or flights that point to signs of industry recovery. For example, Jet Blue added a new flight from London to New York in June 2021. Frontier Airlines and PSA Airlines have started to hire new pilots again, and Boeing will ship at least half of its undelivered aircraft by December 2021.
Passengers are buying tickets on commercial flights in India at 85 percent of the rate they were before the pandemic. Domestic flights have also increased significantly in China after strict lockdown measures in 2020. With economists predicting the population of middle-class Asians to reach 3.5 billion people in the next dozen years, Bhanu Choudhrie sees this as a high-potential area for the airlines.
He also feels that the impact of the pandemic on the aviation industry has not been entirely negative. Despite the sudden and intense turmoil, the pandemic provided aircraft carriers with an opportunity to fill voids left by the competition.
Choudhrie states that individual airlines need to act quickly to invest in future markets like the one predicted in Asia. The advantage of acting now is that the airline will be ready to serve the middle-class Asian population when they need flight services the most. Companies that wait too long will lose out to the competition.
What is Ahead for People Holding Airline Stocks?
Investors suffered significant losses last year as airlines across the world lost more money in a single year than many ever had. According to the New York Stock Exchange Arca Global Airlines Index, the loss was as high as 31 percent for some stockholders. What that means for stockholders today is that they can continue to purchase investments at a discount while the industry recovers.
Market growth looks optimistic for at least the remainder of 2021, with China expected to have 90 percent of its pre-pandemic passenger volume by the end of July. India’s low-cost carriers anticipate they will return to pre-pandemic flight levels by the end of the year. The upward market trajectory is good news for stockholders who want to invest now ahead of the anticipated industry boom.
Bhanu Choudhrie understands that the aviation industry still has some difficult days ahead. Even so, the path to recovery is available to all who will take it. He urges airline leadership to begin planning for how to implement new market advancements and develop a sound strategy to balance supply and demand. The opportunities will be there for those who recognise them and are willing to act quickly to serve new markets.
