The Impact of Covid-19 on EU Air Transportation and Foreseen Strategies

Abstract

This study examines the impact of the Covid-19 pandemic on air transportation in the European Union to predict volume of European air transport according to the official number of infected people. It proposes convenient response strategies that airlines companies could adopt to overcome Covid-19 consequences. Three variables have been collected for each EU country: people air transporting, goods air transporting, and recorded number of Covid-19 infected people on the period between 1/1/2020 and 30/6/2020. We use Ordinary Least Square (OLS) to analyze the impact of Covid-19 on the investigated variables and to predict the number of people and volume of goods transported. We use the Hausman test and redundant fixed effects-likelihood test to determine the most appropriate model. Then, four evolution possibilities of the Covid-19 epidemic have been subtracted; for each one, an appropriate response strategy has been proposed for airlines companies. Results indicate that there is a significant negative impact of Covid-19 on the number of people and volume of goods transported by air in the European Union. Each additional infected person in the EU will lead to a decrease of 99 air passengers. Also, each additional infected people in the EU led to a decrease of 0.075 tons in air goods transportation. Airline companies are recommended to adopt a number of strategies to overcome Covid-19 consequences, such as establishing partnerships, developing markets, and initiating acquisitions. European governments should increase their support to airline companies, and more money should be invested in Research and Development (R&D) to increase flexibility in defeating pandemics.