Question

Discuss and explain three best solution that government or other stakeholders can take in order to help the airlines industry that are affected cause of Covid-19.

Answer 1

Corona pandemic has impacted all the sectors and Industries of the economy. The airline industry is one of the worst hit.Disruptions created is a way higher than what happened during the economic recession in 2008. Nobody knows when the bans will be lifted and what kind of restrictions will be imposed. Future remains uncertain. Everything will somehow depend on how long the pandemic will last on earth.

Following solutions can be adopted to deal with the present crisis.

* Launch a crisis management team.

A well planned initiative must be taken to launch a crisis management team or a plan ahead team. The team should collect and thoroughly analyse all the information that will affect the industry. Then , the team should prepare a post - Covid 19 action plan for the airlines industry .

* Support from the government.

Airline companies are finding it very hard to manage their costs due to the revenue loss.Many airlines are cutting capacity and taking emergency measures to reduce the costs. They are forced to to reduce the number of employees. Government should announce stimulus package which includes employee benefits, relief on taxes charges and slot allocation.

* Mergers acquisitions and bailouts

Global co-operation in the aviation is strong. But airlines is often locked into a single country or jurisdiction.lnternational mergers and acquisitions are rare. If things go out of hand , we should also evaluate the pros and cons of such acquisitions and mergers. Cross border mergers and partial mergers have been successful. For example, in Europe, partial mergers have created dual and multiple brands like Air France/ KLM.

If nations want to avoid mergers and acquisitions, bail out can be adopted.Bail outs will involve cash grants and part loans for airlines.

After the crisis gets over, governments will need airlines to support the economic recovery, connect manufacturing hubs and support tourism. Therefore, survival of airlines industry is crucial for any country.