Growing stakeholderism in the airline industry after the COVID-19 pandemic

Abstract

This article investigates the impact of COVID-19 on the airline industry from a corporate governance perspective. Although the impact of the pandemic was literally unprecedented and the three years of hardship it caused (2020–2022) were particularly acute for the airline industry, the aviation market quickly recovered from a much gloomier forecast. This turnaround occurred at various times in different markets, but the airline industry in most regions has returned to pre-pandemic levels. However, COVID-19 has left a profound impact on the airline industry from a corporate governance perspective. Since almost no airlines could have survived the pandemic on their own, governments bailed out the airline industry, and particularly flag carriers. The rationale for the bailout was not only airlines' economic contributions but also reinforced protectionism in the airline industry. As a consequence, governments have been more concerned about airline corporate governance while emphasizing social issues. Board members and corporate leaders of airlines that received bailouts from governments are pressured to consider the interests of all stakeholders, and not just shareholders. This article argues that stakeholderism gained more influence in the airline industry after the pandemic.