One Year In: Air Travel Plummeted During the COVID-19 Pandemic
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One Year In: Air Travel Plummeted During the COVID-19 Pandemic

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air travel plummeted during the pandemic

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The Briefing

  • In the spring of 2020, two-thirds of the world’s passenger jets were grounded
  • Lockdowns and travel restrictions have had a significant impact on commercial air travel—for 2020, the industry reported an estimated net loss of $118.5 billion

One Year In: Air Travel Plummeted during COVID-19 Pandemic

It’s no surprise that the commercial air travel industry took a hit in 2020, given the pandemic-induced travel restrictions that began early last year.

However, it’s worth noting the sheer magnitude of the situation—according to IATA, COVID-19 was the most drastic hit to the industry since World War II.

Low Air Travel, Steep Losses

To measure air traffic, IATA uses the industry-wide metric revenue passenger kilometers (RPK). RPK is calculated by taking the number of revenue-paying passengers, and multiplying that by the total distance traveled.

In 2020 as a whole, RPK dropped by 66%—the steepest yearly decline in aviation history. As a result, the global aviation industry reported an estimated net loss of $118.5 billion.

International vs. Domestic

International air travel was hit a lot harder than domestic travel—in 2020, RPK for the worldwide international market fell 75.6%. In April, when strict lockdowns limited travel the most, international RPK was down 98% year-over-year.

In contrast, domestic only dropped by 48.8% in 2020 as a whole.

In terms of regional markets, Asia Pacific saw the largest decrease in RPK, with a decrease of more than 80%.

International MarketRPK for 2020 (% year-on-year)
Africa-69.8%
Asia Pacific-80.3%
Europe-73.7%
Latin America-71.8%
Middle East-72.9%
North America-75.4%

On the domestic side of things, Australia saw one of the steepest drops in RPK, at 69.5%. This makes sense, given the country’s relatively strict COVID-19 restrictions and regional lockdowns.

Domestic MarketRPK for 2020 (% year-on-year)
🇦🇺 Australia-69.5%
🇧🇷 Brazil-49.0%
🇨🇳 China-30.8%
🇮🇳 India-55.6%
🇯🇵 Japan-53.6%
🇷🇺 Russia-23.5%
🇺🇲 U.S.-59.6%

Note: These domestic passenger markets accounted for 46% of global total RPKs and approximately 84% of total domestic RPKs in 2020

The Future Looks Bright

While 2020 was a tough year, the future of aviation looks promising.

For example, China’s domestic market showed a negative correlation between new COVID-cases and RPK. When cases were down, RPK increased drastically, showing that there’s pent-up demand.

So once the virus is eradicated and restrictions are lifted, IATA expects flight activity worldwide to bounce back, as they did in China.

» Want to learn more? Check out our COVID-19 information hub to help put the past year into perspective

Where does this data come from?

Source: IATA December 2020 Report

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The Accelerating Frequency of Extreme Weather

Extreme weather events, like droughts and heatwaves, have become more common over the years. But things are expected to get worse.

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Extreme Weather Events

The Briefing

  • We’re already seeing the impact of climate change—today, droughts, heatwaves, and extreme rainstorms are 2x more frequent than they were a century ago
  • In less than a decade, Earth’s climate is expected to warm another 0.5°C
  • If this happens, heatwaves will be 4.1x more frequent than they were in the 1850-1900s

The Accelerating Frequency of Extreme Weather

The world is already witnessing the effects of climate change.

A few months ago, the western U.S. experienced one of the worst droughts it’s seen in the last 20 years. At the same time, southern Europe roasted in an extreme heatwave, with temperatures reaching 45°C in some parts.

But things are only expected to get worse in the near future. Here’s a look at how much extreme climate events have changed over the last 200 years, and what’s to come if global temperatures keep rising.

A Century of Warming

The global surface temperature has increased by about 1°C since the 1850s. And according to the IPCC, this warming has been indisputably caused by human influence.

As the global temperatures have risen, the frequency of extreme weather events have increased along with it. Heatwaves, droughts and extreme rainstorms used to happen once in a decade on average, but now:

  • Heatwaves are 2.8x more frequent
  • Droughts are 1.7x more frequent
  • Extreme rainstorms are 1.3x more frequent

By 2030, the global surface temperature is expected to rise 1.5°C above the Earth’s baseline temperature, which means that:

  • Heatwaves would be 4.1x more frequent
  • Droughts would be 2x more frequent
  • Extreme rainstorms would be 1.5x more frequent

The Ripple Effects of Extreme Weather

Extreme weather events have far-reaching impacts on communities, especially when they cause critical system failures.

Mass infrastructure breakdowns during Hurricane Ida this year caused widespread power outages in the state of Louisiana that lasted for several days. In 2020, wildfires in Syria devastated hundreds of villages and injured dozens of civilians with skin burns and breathing complications.

As extreme weather events continue to increase in frequency, and communities become increasingly more at risk, sound infrastructure is becoming more important than ever.

Where does this data come from?

Source: IPCC
Details: The data used in this graphic is from the IPCC’s Sixth Assessment Report, which provides a high-level summary of the state of the climate, how it’s changing, and the role of human influence.

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Blockchain Applications: Tokenization of Real Assets

Tokenization is a future application of blockchain technology, and it could make investing in physical assets much easier. (Sponsored Content)

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The Briefing

  • Tokenization is a solution that divides the ownership of an asset into digital tokens
  • This process could democratize investment in physical assets

Blockchain Applications: Tokenization of Real Assets

Did you know that blockchain has the potential to transform the way we invest in physical assets?

Tokenization is a solution that divides the ownership of an asset (such as a building) into digital tokens. These tokens act as “shares”, and are similar to non-fungible tokens (NFTs). The difference here, however, is that the tokens are fungible and they are actually tied to the value of the asset.

In this graphic sponsored by Global X ETFs, we visualize how tokenization could be used in real estate.

Tokenization in Real Estate

Blockchain has strong potential in real estate investing because it mitigates many of the asset class’ hurdles. Here’s a brief round-up of its theoretical advantages:

Liquidity

Buying and selling real estate is normally a tedious process. If a property were to be tokenized, it would essentially cut out the middleman and allow buyers and sellers to transfer ownership directly.

These transfers would be as easy as buying and selling cryptocurrency.

Removing barriers to entry

Because properties are expensive, real estate investing is typically limited to institutional investors with large amounts of capital. Individuals can gain exposure through a real estate investment trust (REIT), but these vehicles can carry high minimums and fees.

Tokenization could enable individuals to buy and sell real estate in small denominations (even fractions of a token) and without traditional fees.

Transparency and security

Blockchains are decentralized, digital ledgers known for their security. Tampering with a blockchain’s data is incredibly difficult because the ledger is shared and verified by all of its users.

This provides investors with full transparency into the past transactions of a property, as well as an undeniable proof of ownership.

Democratizing Investment

If tokenization proves to be effective, it could be extended to a whole range of other physical assets—most of which have their own unique barriers. Consider the following table, which lists the 12-month and 10-year return of various luxury goods.

Category12-month return10-year return
Handbags+17%+108%
Wine+13%+127%
Collector cars+6%+193%
Watches+5%+89%
Rare whisky-4%+478%
Art-11%+71%

Source: Knight Frank (Dec 2020)

Rare luxury goods have historically been sold through live auctions, where the highest bidder is awarded ownership. Thanks to blockchain technology, this could change in the future. In fact, Sotheby’s (a 277-year-old auction house) recently began to accept cryptocurrency as a payment option in its auctions.

In short, tokenization has the potential to greatly reduce the barriers around alternative and physical assets. For investors, this means a much wider set of opportunities to pursue.

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