European lockdowns: the need of innovative ideas for the airline industry

 

heathrow on tuesday

As major European nations stare into the abyss of yet another lockdown, the ghost of economic consequences creates disturbing ripples in every sector.

The demand for oil – and to some extent, gas too – will definitely suffer and in inverse proportion to the decline, the crude oil stocks will go up in the coming weeks.

The US crude oil stocks rose by over 1.6 million last week and it dampened somewhat the oil price rally that we had been witnessing up until then. The hope of the silver bullet, an effective vaccine, however, raised the veil of gloom, while giving oil price a boost to counter the negative effect of inventory build-up.

What worries investors is not the onset of yet another lockdown; it’s the alarming news that the scientists have found a new strain of the virus. “Will the existing vaccines work against a new strain?” is the key question that arises in the wake of this news.

We know that viruses evolve – perhaps, in order not to kill its habitat, the host. In this context, we can only hope the new strain could be a milder form of what brought the whole world to its knees at the beginning of this year; it remains to be seen, though.

Although the Western governments do their utmost best to help both businesses and individuals affected by the crisis to mitigate the impact, there is no way of escaping from disastrous consequences for certain sectors such as airline industry as a whole.

For instance, the above animation shows the sky above Heathrow airport in England at 10:20 am on Tuesday; there were just 8 planes. On a normal day, the planes used to land with a frequency of approximately 1 in every two minute.

As this is the case, the demand for jet fuel, the employment for thousands of workers in the main industry as well at those associated with it, such as catering, engineering and spare parts and above all, the revenue from the sector are collectively suffering as never before.

It's not all doom and gloom for the airline industry, if innovative thinking is given its place in the current climate.

In Japan, for instance, certain airlines use their aircrafts for offering the public flight simuator experience; some offer charter flights for school children to see the areas where they live from above. 

Of course, these measures will not generate revenue that the airlines in question used to get. They, however, are steps in the right direction at present.

Even if the existing vaccines are as effective as being claimed, the transmission of the virus will not show any quick sign of abating: on one hand, there are not enough doses available to cover the whole population in a given country; on the other hand, there are millions of people who stubbornly refuse to get it citing various reasons.

Above all, the most challenging scenario faced by the authorities is persuading the public to stick to strict social distancing measures, the main factor in spreading the disease.

Unfortunately, it has not been easy. As soon as lockdowns were eased, people, especially, the young, flock together near supermarkets, ignoring the plea by the government and health professionals and the inevitable follows not far behind – spikes in infections.

In this context, how the world will emerge from this crisis is just anybody’s guess.

It’s the most serious, global health crisis since the Spanish flu in 1918; the way global health professionals struggle to keep Coronavirus at bay, pinning their hopes only on a vaccine, implies as if nothing had happened in a century to face a major crisis of this kind – despite the remarkable advances made in technology and science in general.

Oil producing nations remain hopeful that at least the price of crude oil will stay above $40 a barrel in the coming months so that they can at least balance their books.

Qatar, the rich, tiny Gulf state, for instance, hopes that the oil price above the magic number will help it bring down the significant deficit in the next fiscal year.

The situation is much more precarious for other oil producing nations as finding feasible alternatives to balance their books is neither easy nor forthcoming.

 

 

 

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