icf.com/ aviation Status of the Industry: Airlines & Air Travel Carlos Ozores Principal & Americas Status of the Industry Webinar Consulting Lead April 28, 2020
Three main questions Where are we? Where are we going? What will the future look like? ICF proprietary and confidential. Do not copy, distribute, or disclose. 2
Global aviation has virtually shut down, with no resumption date in sight Commercial Flights, 2020 vs. 2019 120% 100% 80% 60% 40% North Am Asia 20% Latam Europe Africa 0% Jan Feb Mar Apr ICF proprietary and confidential. Do not copy, distribute, or disclose. Source: ICF analysis of Flighradar24 data 3
Which way is North? Bermuda Triangle ICF proprietary and confidential. Do not copy, distribute, or disclose.
The timing and shape of recovery depends on our ability to control or mitigate the pandemic The longer this phase lasts, Now the slower the recovery Quarantine Phase Pre-Recovery Phase Recovery Phase 2-3 months? 6-18 months? Several years Essential passenger flights Domestic resumes first Full border opening Repatriation flights Gradual border opening limits “Social distancing” goes away, but International recovery new sanitary practices in place Cargo flights “Social distancing” fully in place Passenger behavioral change at airports and onboard flights affects business and leisure – but how much? Only the brave will fly Recovery speed depends Need to convince customers that a) depth of economic recession traveling is safe again b) health of remaining airlines ICF proprietary and confidential. Do not copy, distribute, or disclose. 5
ICF forecasts traffic to recover in 3-4 years*, but our industry’s challenge is overcoming 2020-201 * Assumes a cure/treatment is widely available in 1Q 2021 ICF COVID-19 Global Recovery Forecast Air Passengers, Indexed: 2019 = 100 107 105 103 100 100 98 96 88 Years to recover pre COVID-19 traffic 72 6.8 4.8 4.5 37 Total Domestic & International Intra-Region 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 ICF proprietary and confidential. Do not copy, distribute, or disclose. Source: ICF analysis 6
Aviation has shown resilience in past crises, but this crisis is very different Recovery from Great Recession (2008/2009) vs. COVID-19 Air Passengers, Indexed: Pre-crisis = 100 130 Key differences vs. past shocks 120 110 Total activity shutdown 100 Global scope 90 Severe economic impact 80 Europe 70 No China this time USA 60 Supply-side constraints Rest of World 50 There will be behavioral change ICF COVID-19 40 30 0 1 2 3 4 5 6 7 ICF proprietary and confidential. Do not copy, distribute, or disclose. Source: ICF analysis, IATA AirportIS 7
This crisis will drive major changes to passenger behavior and industry practices Long-term Changes to Passenger Behavior Long-term Changes to Industry Practices Passenger scrutiny of health Strict aircraft hygiene conditions in their destination 91% 9% 92% 8% controls? country? Faster adoption of video- Sanitary controls at airports, conferencing for work and 90% 10% such as passenger 75% 25% education? temperature screenings? Passenger health Increase preference for 50% 50% verification prior to 63% 37% nonstop flights? international flights? Reduce demand for Widespread passenger use conferences and other large 51% 49% 44% 56% of protective equipment? events? Yes No Yes No ICF proprietary and confidential. Do not copy, distribute, or disclose. Source: ICF COVID-19 Survey, April 2020 8
This crisis also reinforces prevailing industry Megatrends COVID-19 impact on Megatrend Consolidation Big Data Sustainability ? ICF proprietary and confidential. Do not copy, distribute, or disclose. 9
In summary, we can expect… Fewer airlines What does the Increased pressure on airlines to cut costs “new normal” Less long-haul demand, fewer widebodies for Suppliers More used parts due to early retirements look like? Airlines seeking more flexibility from suppliers 10
Thank you Carlos Ozores Principal & Americas Consulting Lead +1.917.860.8630 Carlos.Ozores@icf.com For more information from our experts, please visit Our Aviation Insights ICF proprietary and confidential. Do not copy, distribute, or disclose. 11
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