Eco211 Assignment

The pandemic resulted in global travel shutdown which left many forced to take leave and others
without jobs. The key factors affecting the aviation industry after the pandemic include the
decline in tours and travels as a large number of international as well as domestic flights are
getting cancelled all across the globe to curb the transmission of the virus. The government all
across the globe are cancelling the visa of foreign people and locking down affected area which is
also one of the major reason behind the slowing down of the aviation industry.
Effect of COVID-19 on the aviation industry can be observed in each region including North
America, Europe, Asia-Pacific and Rest of the World. For instance, in the US, since the national
health emergency due to the COVID-19 outbreak, most of the region is on complete lockdown,
which is in turn restricting the domestic travel in the country. Countries such as Italy, France,
Spain, and India are under complete lockdown and all kinds of flights are stopped until further
notice.
Therefore, the international airline industry is estimated to experience a severe V-shaped

decline throughout 2020 in terms of capacity, with cross-regional variances with respect to the
severity of the decline. For example, the passenger capacity decline is estimated to hit Europe
the worst. In the second quarter of 2020, a 90 percent decline in European passenger traffic is
estimated, if the same travel restrictions will continue to prevail.
Considering severe declines on the demand side, as of March 2, 2020, there were two loss
scenarios developed by the International Air Transport Association (IATA) - limited and
extensive. According to the extensive impact scenario, the initial containment measures taken
by the governments were estimated to affect the global aviation industry by approximately 130
billion U.S. dollars loss of annual passenger revenue. Nonetheless, as the outbreak exceeds 40.6
million infected people around the globe, IATA updated its estimates. Airline passenger revenue
loss estimates now reach 314 billion U.S. dollars globally. On the other hand, airports loose as a
result of this crisis as well. In 2020, an estimated revenue loss of around 21 and 38.8 billion U.S.
dollars in North America and Europe respectively are expected.
Similar to the Great Financial Crisis in 2008, Covid-19 outbreak has led to a substantial drop in
demand in the hospitality industry. Customers don’t consume, guests don’t book rooms and
travelers don’t travel. (Lopez and Bianchi,2020)
The foregoing concerns are mainly on the demand side. However, as mentioned earlier, the
COVID-19 crisis is also a supply crisis. This is especially evident in the hospitality and tourism
industry. Hotels, restaurants, spas, therapists, etc., are asked to put in place many sanitary
adjustments that increase the cost function of the supplier potentially leading to a loss that will
have to be compensated by a loan - a potential ordeal for some suppliers. To summarize, the
situation in this industry is very sensitive. Some accommodations with a lot of outdoor space
(like a campsite for example), may have one of their best summer seasons ever. Inversely, some
high standard hotels where high quality service is their key selling point, may have it tough.
Aside from initial lockdowns and gradual unlocking of economic activities, public has been
encouraged to ensure social distancing, practice appropriate hygiene, mask wearing and
avoiding gatherings unless critically needed (Sharma, 2020; Tiwari, 2020). For resuming
tourism activities to revive the sector, governments at various levels have initiated check-ins
with relevant COVID-19 negative reports, encouragement on minimum days stay at hospitality
establishments (Condé Nast Traveller, 2020).
A large portion of individuals (over 50%) are not willing to dine in at a restaurant immediately.
The same is true for staying at hotels. Most customers (over 50%) are not willing to travel to a
destination and stay at a hotel any time soon. Only around a quarter of the customers have
already dined in a restaurant and only around one-third are willing to travel to a destination and
stay at a hotel in the next few months (Gursoy et al., 2020). These findings suggest that
customers in general still do not feel comfortable to dine in at a sit down restaurant, travel to a
destination and stay at a hotel. Since the breakeven point in the hospitality industry is relatively
high due to high operating costs, the survival of many hospitality businesses heavily depends on
increasing the demand for their services and products. Thus, figuring out what will make
customers return is essential and this requires intensive research efforts. The industry and the
academia are in urgent need of behavioral and operational hospitality marketing and
management research to guide the hospitality operations in the time of COVID-19 pandemic.
the virus that causes COVID-19, spreads easily between people who are in close contact, through
respiratory droplets released when an infected person talks, coughs, or sneezes. These droplets
can land in the mouths or noses of people who are nearby or possibly could be inhaled into their
lungs. Infected people can spread the virus whether or not they have symptoms. It may be
possible that a person can get COVID-19 by touching a surface or object that has the virus on it
and then touching their own mouth, nose, or possibly their eyes. This is not thought to be the
main way the virus spreads, but we are still learning more about how this virus spreads. The
virus can also spread from people to certain animals in some situations.
Disney’s US theme parks face a potential $3.4 billion revenue loss. This is due to the ongoing
coronavirus closures combined with the economic recession projected to follow, according to a
MoffettNathanson research paper.
According to Malaysian Association of Amusement Theme Parks & Family Attractions

(MAATFA) president Tan Sri Richard Koh, attendance at theme parks and attractions have
declined by between 40% and 90%, depending on state and the number of Covid-19 cases there.
This is because people are scared to go out since the virus that causes COVID-19, spreads easily
between people who are in close contact, through respiratory droplets released when an infected
person talks, coughs, or sneezes. It is possible that by touching a surface or object that has the
virus on it and then touching their own mouth, nose, or probably their eyes, a person can get
COVID-19. He clarified this because, despite little or no customers, the theme parks, amusement
and attraction firms, which initially require massive capital investment, would end up having to
bear personnel, electricity and maintenance costs if they continue to operate. The strong 25
percent entertainment tax for family leisure is one of the biggest challenges facing the industry,
Koh said as he reiterated the theme park facilities should be enjoyed by all and not just the
dangerous tourist restriction measures are enforced in all the theme parks. In general, the
regular carrying capacity is less than 30 percent of the full value, or 50 percent of the park's built
capacity. (Ganesan,2020)
In addition, many theme parks decided not to open indoor activities such as theater
performances, temporarily because if the tourist number is controlled under 30 percent, the
number of the audience might be lower than the number of actors on the stage.
Therefore, even if the theme parks want to attract more tourists, it is limited by the current
epidemic prevention situation and cannot be fully opened to the public. The business
performance of relevant enterprises will still be significantly affected in a period of time.ch. The
middle class, he said, should not be burdened by the 25% tax.

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The pandemic resulted in global travel shutdown which left many forced to take leave and others

Therefore, the international airline industry is estimated to experience a severe V-shaped

According to Malaysian Association of Amusement Theme Parks & Family Attractions

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