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A Look At How the Coronavirus Pandemic is Affecting Key Industries

Professor of Financial Economics and Part-time Value Investor, Transfin.
Mar 28, 2020 12:21 PM 2 min read
Editorial

The Age of COVID-19 is undoubtedly a grim one for virtually all industries. Demand is down, markets are crashing and stocks and investor confidence are falling. Moreover, the streets are empty and stores are shut – the economic consequences will undoubtedly be dire. And once this crisis is over, recovery will take time and effort.

 

Let’s take a look at how three key industries are faring amidst the coronavirus pandemic.

 

Aviation

The 21-day national lockdown, which began on March 25th, has suspended all domestic and international commercial flights. This has invariably threatened incomes and jobs (6.2m in total) in the aviation industry, as well as put a cloud over the post-pandemic recovery. Airlines are cutting salaries, laying off pilots or sending some employees on compulsory leave without pay.

 

In a letter to the Prime Minister recently, Alexandre De Juniac, Director General of the International Air Transport Association (IATA), said, "IATA estimates that COVID-19 could result in a 9% loss in passenger volumes and $2.1bn loss in passenger base revenues for the air transport market in India in 2020...The disruptions in air travel from COVID-19 could reduce about 575,000 jobs and $3.2bn in GDP supported by the air transport industry in India." [News18]

 

Telecom

The surge in the number of people working from home has seen home internet networks flooded with official usage, leading to network congestion. In the last few days alone, there was a 20-30% increase in data demand, leading to patchy networks and affecting everything from calls to video streaming,

 

Considering this, the Cellular Operators Association of India (COAI), the industry body for telecom operators like Airtel, Reliance Jio and Vodafone Idea, has urged mobile customers to use their data more responsibly. People are being requested to avoid “any trivial use of internet...so that remote working, online education, digital healthcare, payments and other critical services can run smoothly and uninterrupted.” [TelecomTalk]

 

Crude Oil

The oil industry, as you may have guessed, is no fan of lockdowns and curfews. The fall in demand has plunged oil prices to historic lows – Brent fell below $25 per barrel. This, coupled with the Saudi-Russian oil price war (read more on that here), is severely hurting oil companies around the world. [BS]

FIN.

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