Financial Impact of Covid-19 on the Airport industry

Literature Review, 2022

7 Pages


Literature Review

The Covid-19 pandemic had significant financial consequences, and the pandemic did not leave out numerous worldwide revenue streams. The new virus began in December 2019 in China and swiftly spread around the world, affecting several revenue streams on every region. China controls approximately 20% of worldwide business activities, with several industries impacted by the nation's lockdown processes. China begun the most rapid and severe shutdowns of several of its industries, and also imposing restrictions on the flow of people and commodities, into and out of the country. Numerous nations followed immediately, with the epidemic wreaking havoc on numerous economies. Air travel was suspended in a number of nations for extended durations, causing substantial disruption to global supply networks (Guan et al., 2020). The main objective of this study is to explore the effects of the coronavirus on the airport industry and the adjustments that occurred as a result of the shifting economic landscape. Since the coronavirus epidemic in China, more than 210 regions and nations have reported at least one positive case. There are presently over 100 million confirmed cases globally, despite the development of vaccinations to combat the virus's spread. According to the World Health Organization, the epidemic has claimed over 2 million lives. This scenario might have been far worse had the infection spread unchecked.

Following the virus's outbreak, the globe faced its worst economic slump since World War II, and economists anticipated that the financial system would decline by 3% as a result of the virus's impact. As a result, the pandemic's negative consequences cannot be emphasized. Additionally, the World Commerce Organization projected that global trade volume would decline as a result of nations enacting stringent restrictions to contain the virus's spread. To halt the spread of the virus, governments throughout the world enacted a series of drastic measures, including temporary closures of shops and factories, travel restrictions, and involuntary imprisonment of individuals. These actions resulted in a severe scarcity of manpower, raw materials, and other active components required for commodity manufacturing. Additionally, the problem was exacerbated by the consolidation of logistical networks. As a result, global supply networks experienced delays and inventory shortages. The virus's effects have been widespread, with industry professionals projecting that the trend would continue to deteriorate until the end of 2022. As a result, industries began preparing for a rapid recovery and the ability to produce without suffering losses due to the epidemic. It is critical to remember that the coronavirus pandemic is not the only tragedy to have wreaked havoc on global supply networks. Other natural catastrophes, such as the 2011 Japan earthquake, the 2003 SARS outbreak in China, and the 2004 Indonesian Tsunami, have temporarily affected global supply chains in the past. These disasters resulted in a scarcity of goods and other raw resources, impairing production in various regions of the world. However, manufacturing operations were halted for a brief period, and recoveries occurred within weeks or a few months. Since the coronavirus pandemic began in 2020, it is evident that the extent and scale of the consequences have been more severe and far reaching compared to previous disasters.

The majority of catastrophes, such as nuclear, and radiation accidents, earthquakes, wars, and tsunamis, often impact a small region and last for a short duration. However, the corona virus had spread globally after a few months, stranding millions around the world in their homes and preventing them from carrying out productive tasks. Worldwide, the virus caused partial or complete halting of critical economic sectors (Guan et al., 2020) such as the airport industry. The pandemic's end date still remains uncertain, with the increasing number of positive cases being currently reported, providing a real danger of additional outbreaks in a number of nations. In comparison to previous catastrophes, Covid-19 disrupted local supply systems and impacted global supply chains at every level, from raw materials to manufacturers to the end consumer of products. The pandemic demonstrated the interconnectedness of all companies via a complex network of worldwide supply chains. The supply chain's upstream actors are impacted by the actions by the participants in the downstream (Ivanov & Dolgui 2021). Negative outcomes in one industry can produce sustained and devasting effects on the operations of several industries. The pandemic's effects were felt across nearly all worldwide supply chains, from raw materials to transportation.

The airport industry also felt this effect, as major business was affected. Many people were not able to travel, with many countries limiting the inflow of people from different countries. This meant that, many airports remained shut in large durations due to the grounding of flights. Airports rely on mass inflow of traveler and airline traffic to be able to achieve their financial objectives. Therefore, with a reduced number of travelers, and flights, major revenue streams in the airport industry took a significant hit.

Understanding the Airport Industry

Over the past decades, the functions and use of airports have increased in a great way. The reason for this increase is the rising of global air traffic due to high tourism and development in the travel sector. Airports have become major economic hubs not only for the airlines but it has accommodated major industries such as car rental business, accommodation, banking, conference facilities, logistics for imports and exports, shopping malls and many more. The airports are major and large cities performing multiple functions hence rise in airport industry.

Airports, in addition to performing a vital economic purpose in a number of metropolitan areas across the world, serve as critical national strategic centers for commerce and development, as well. It is imperative that they serve as biosecurity zones, aiding in the screening of people that enter a country. Despite the fact that airports are required to control and eliminate disease entry as well as to assure travel safety, the protective measures given have repeatedly been unsuccessful in preventing disease entry and spread on a consistent basis. As a result of the fast rise of the aviation sector, diseases spread more quickly as a result of the increased exposure (Gössling et al., 2020). An infection can be spread from region to region, state to the other and among continents in a matter of minutes, hours, or even overnight from one geographical location to another. As academics seek to forecast and explain epidemics and pandemics, the need to understand how sickness travels through airports and other forms of transportation has aroused scholarly interest. It is important to know how infections are spread through airlines and the airports to effectively combat problem of disease transmission. Learning is essential so that it is easy to control the spreading of infectious and pandemics in tourism and travel industry since this has been rising and has become frequent (Hao et al., 2020). Quarantines and border closures are commonly used in order to minimize the financial and social cost of an outbreak when airports are unable to identify diseases transmitted by entering hosts using thermal scanning, which is the primary method of detection. This restricts the ability of passengers to move about freely, which has a negative impact on the airport's overall revenue and profitability.

Due to the fact that inspections are performed at airports and destinations, many persons are prevented from leaving their homes, resulting in a decrease in travel from risky locations. If they test positive for a pandemic disease, tourists and even residents may be concerned about being quarantined, particularly if they arrive at a distant airport where they may be shut off from their families and friends. Thermal scanners have lately been brought into question because to the high frequency of COVID-19 exporting from illness hotspot regions, which has called into question their utility and efficiency. In addition to being economic centers, airports have an essential effect on surrounding especially the public and people they serve, as previously stated. Airports are, however, both as vulnerable to economic downturns in the same way. The 2008/2009 economic recession had a negative influence on airports in the United States of America, with some obtaining grants under the American Recovery and Reinvestment Act of 2009 (Orndoff & Papkov, 2012). However, International Monetary Fund (IMF) asserted corona virus epidemic caused the worst economic downturn in modern history, forecasts indicated recovering from this would take the shape of a “U,” having a decrease after which there will be some flattening at the bottom and then a rising expansion). According to research, airport industry withstands the worst of the consequences of the changes.


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Financial Impact of Covid-19 on the Airport industry
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financial, impact, covid-19, airport
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Joseph Kariuki (Author), 2022, Financial Impact of Covid-19 on the Airport industry, Munich, GRIN Verlag,


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