Forecasting Recovery Time in Air Transport Markets in the Presence of Large Economic Shocks: COVID-19

This paper estimates the relationship between the strength of economic shocks and temporal recovery in the air transport industry. Our results show that world recovery of passenger demand to pre-COVID-19 levels is estimates to take 2.4 years (recovery by late-2022), with the most optimistic estimate being 2 years (recovery by mid-2022), and the most pessimistic estimate is 6 years (recovery in 2026). Large regional differences are detected, Asia pacific has the shortest estimated average recovery time (2.2 years), followed by North America (2.5 years) and Europe (2.7 years). For air freight demand a shorter average world recovery time (2.2 years) is predicted compared to passenger demand. On regional level Europe and North America are comparable in average recovery times (2.2 years) while the Asia-Pacific is predicted to recover faster (2.1 years). The results show that the strength of economic shocks of various origins impact the linear growth of passenger and freight traffic and the temporal recovery of the industry in a predictable transitory way. Hence, the impact of the COVID-19 recession is transitory opposed to permanent for the air transport industry.