A Coronavirus Vaccine Is Not A Silver Bullet For Airline Demand Recovery

Airline demand dropped precipitously when the coronavirus hit, and is on a very long road to recovery that doesn’t even even seem certain. As a society, we have lived with other risks like the flu, but this virus has uncertainties around it, potentially fatal consequences, and importantly no available vaccine or therapeutic that would allow society to learn to live with the virus rather than shelter from it. This suggests that demand for airline travel is dependent, to at least some degree, on a vaccine being effective and widely available.

Several airline CEOs have been on TV lately stating exactly this, that airline demand will not return with strength until there is a widely available vaccine for the coronavirus. United’s Scott Kirby said that traffic will plateau at 50% until there is a vaccine. Both the American and Southwest CEOs said a vaccine is needed for a full recovery, and other industry experts seem to agree.

It’s rational to agree with them that a vaccine, or a strong therapeutic at least, is necessary for a full airline demand recovery. However, a widely available vaccine is not likely to quickly result in airline demand recovery for four reasons:

Demand For Air Travel Depends Not Only On What I Do, But What I Think Others Will Do

If you take the flu vaccine in any given year, you don’t go around behaving as if there is no way you can catch the flu. You still are careful about avoiding others’ coughs and sneezes, at least. A COVID vaccine’s efficacy may be good at producing antibodies, but it likely will take years before science knows how effective those antibodies are at stopping transmission or contraction of the virus or how much they may help if you do get it. Because of this, having the vaccine may not make one ready to get on an airplane without some understanding of these issues, as for some this may not be enough to feel truly confident.

Not All Demand Recovery Is Based Only On Confidence

For some business travel, the reason not to fly in the future will be cost based, not risk based. Businesses that pay for travel as a business expense will be weighing the use of flights versus video for certain kinds of business, and even if the traveler would feel safe, the business may choose not to pay for the trip. United’s Kirby disagrees with me on this, saying that eventually all travel will return because face to face meetings are necessary. This is an interesting debate, as are you not face to face when each is on a video screen talking? Is being across a physical, versus virtual, table and going to dinner together in the evening essential for a bank giving a pitch to a CFO on a potential new financing product? I have a friend who told me that he used to fly to London for a single meeting, and never considered that risky behavior before. Now he says he will only fly to London when he has multiple meetings because he is comfortable with video for single meetings. Is this attitude going to change with a vaccine? While I hope that Scott Kirby is right for the industry as a whole, I think it’s more realistic to expect a permanent reduction in certain kinds of business travel with or without a vaccine.

The Media Following A Vaccine Will Greatly Affect The View Of It’s Effectiveness

When there is a vaccine that the world trusts, if that happens of course, the months that follow will shape the way people think of the treatment. Imagine a headline “Vaccinated Traveler Contracts Covid After Long Flight” one month after an agreed vaccine is available. Or “Study Shows Antibodies Aren’t As Effective As First Thought”. Now be more positive, and think of headlines like “Many More People Getting Covid Vaccine Than Ever Took The Flu Vaccine” or “As Air Travel Picks Up, Rates of Covid Contraction Drops Thanks To Vaccine”. The point is that we can’t be sure what the months following a vaccine will bring, and so while a vaccine may be necessary for airline demand recovery, it will not likely recover quickly once the vaccine is available since the view of effectiveness of the vaccine will evolve through the media.

One More Layer

Like most, I want this virus to be contained, want to know that I can live my life understanding the risks and the consequences, and I believe that a vaccine is a way to help reach this state for the novel coronavirus. We have changed as individuals and as societies because of this virus, and what we have learned in this time will make us safer and stronger. That means things like distancing and masks will eventually go away as mandates, but will still be smart in certain situations and we understand that. Do we really want airlines and stores to stop all the new cleaning they’ve put in place? Business talk about a “layered approach” to safety, adding distancing, more cleaning and sanitation stations, thoughtful air flow, etc. A vaccine is another layer, albeit a critically important one. But it is not a layer that makes everything else redundant or useless. It would make us more safe, but it’s effectiveness is not guaranteed. Dr. Anthony Fauci has recently stated that any vaccine available soon is likely to be only partially effective. So, adding this important layer doesn’t necessarily translate to going online and immediately buying an airline ticket. Expect time well after a vaccine for this to happen. A vaccine is a necessary, but far from sufficient condition to return air travel demand to 2019 levels.