The Impact of Covid-19 on the Aviation Industry: A Post Covid Econometric Analysis

Abstract

A newly discovered COVID-19 disease, notoriously known as Coronavirus, caused by the novel Corona Virus has shaken the world. It is no surprise that the aviation industry has been hit hardest by the Corona Virus. The current research makes an effort to identify the post effect of Covid-19 on the aviation industry in Belgium, Albania, Austria, Finland, Germany, Italy, Spain, France, Turkey and United Kingdom. The study explained the magnitude or impact of Covid cases and Covid deaths on Airline traffic, Freight traffic and Passenger traffic. To meet the objectives of the current study the two models have been tested separately. In the first model, we tested the impact of Covid cases on the study variables Airline Traffic, Freight Traffic and Passenger Traffic. In second model, we tested the impact of Covid deaths on the study variables Airline Traffic, Freight Traffic and Passenger Traffic. The study also applied the Augmented Dicker’s fully test to measure the stationarity of data. Results of the panel data showed that Covid cases as well as Covid deaths posed a significant declining impact on Air traffic, Freight traffic and Passenger traffic. Furthermore, VAR, Impulse Response Function (IRF) and Variance Decomposition has been applied for describing shocks, quantifying shocks and explaining intra and inter dependencies between the study variables in detail.