How airlines are feeling the effects of the COVID-19 pandemic
During the February L2b member meeting, representatives shared their opinions regarding the aviation industry’s recovery from the COVID-19 pandemic. Although pandemic protective measures slowed in 2022, the aftershocks on the airline industry may not be felt for some time. The member roundtable did not discuss the effects in depth. Still, members shared timely and localized information that shed light on the current outcomes of airline operations post-pandemic.
L2b Mexico representative Andrés Remis with Santamarina Y Steta shared that the Mexican aviation industry was hit hard, primarily due to the lack of government support and aid. As a result, several Mexican airlines have closed, including Interjet and Aeromexico, along with Aeromar, which announced its closing this week. These airlines, which were struggling financially before the pandemic, were left with little hope of continuing once the pandemic began.
In addition, The FAA downgraded Mexico to category two regarding safety. In the past, Mexico has never been in this category for long, and the aviation authority is working on changing the grade. However, this process may take some time without government support, compounding the stress on Mexican airlines’ ability to serve passengers in the country and partner with their next largest market, the U.S.
“I believe that the economic effects on airlines from the pandemic are just now starting to emerge,” Remis said.
From the South African perspective, L2b representative Hayden Davies of Webber Wentzel shared that post-pandemic, there is less capacity and, therefore, more expensive ticket prices. However, the country is slowly adding capacity, about 70 percent, according to Davies. In addition, international airlines such as Emirates and British Airways have increased the number of flights in the country, but the issue still has not been resolved for domestic travel.
In the case of Argentina, four airlines ceased operations after the pandemic, according to L2b representative Cecilia Rodriguez Grellett of Rodríguez Grellet Law Firm. However, with inflation at 100% in Argentina, prices for domestic passengers are high and finding investors to revitalize closed airlines does not look promising. In addition, Argentina will hold elections in the Fall and is looking for changes in the situation once the new government takes office.
Alejandro Piera of Guanes, Heisecke & Piera Abogados emphasized the post-pandemic issue of low capacity and high fares that affect passenger travel in Latin America. He noted that the sales volume of tickets sold today is comparable to pre-pandemic levels, but the number of tickets sold is still around the same rate as in 2019.
The L2b members agreed that the effects of the COVID-19 pandemic on airlines might not be uncovered for some time. And as the aviation industry constantly grows and evolves, L2b’s network of international law partners works to understand these effects on the current set of regulations, authorities concerned and market factors.
L2b Aviation’s network of over 45 law firms around the globe specializes in aviation, successfully representing airlines, financiers, lessors, manufacturers, insurers, airports and export credit agencies. Aviation transactions can become complicated quickly, and members of L2b Aviation are well-equipped to provide the requisite expertise to navigate the nuances of the industry successfully.