Daily Management Review

Post-Pandemic Travel Norms And Issues Now Concern For Airlines Instead Of Pandemic Hit Recovery


Top executives of global airlines are now focused on the assessment of the long term impact of Covid-19 pandemic on the premium travel segment, technology and other critical aspect of their business even as the airline industry continues to face new issues that could derail or hamper the industry’s recovery.
The longer-term fallout of the more than a year of lockdowns were being discussed by aviation leaders participating at the World Aviation Festival albeit virtually because of the Covid-19 pandemic.
Growing doubts over the northern summer vacation season has caused renewed scrutiny of the cash situation of airlines and their ability to withstand another washout as top executives and thousands of participants attended the event earlier this week.
There are also concerns after the addition of France, Britain and 114 other states to the US "Do Not Travel" list.
"There will be a lot of carriers that will not make it through," Air France-KLM Chief Executive Ben Smith said, citing nameless rivals that were "not viable prior to the crisis".
Smith said that market consolidation would be welcome for survivors such as the state-backed Air France-KLM. "Even if it takes longer than planned for traffic to return, with a reduction in capacity that's a good balance for us," Smith added.
Following a 10.4 billion euro ($12.5 billion) bailout in 2020 and 1 billion-euro share issue this week, more capital is expected to be needed by Air France-KLM. There might also be need of raising money within the next few months for the long-haul juggernaut Emirates, said the airlines President Tim Clark said during the event.
Airline executives are looking beyond the pandemic to anticipate underlying shifts despite the deep uncertainties.
The airlines expect that many of the meeting in the future would be virtual and hence a structural slump in business travel is high on the list of concerns of the airline bosses.
"A large percentage of this traffic will not come back on long-haul," aviation consultant John Strickland predicted, as companies curb travel costs and carbon emissions. "You can't beat face-to-face in many business situations," he said. "However a big amount can be cut."
Clark and his Virgin Atlantic counterpart Shai Weiss acknowledged that it will impact yields, or fare levels. But leisure customers are expected to fill business cabins, according to the Emirates boss.
"If you drop (fares) by 15% or 20% they will come to business," Clark said. Such customers are "not quite as good as the corporate segments were, but hey ho, you take what you can get and you fill your aircraft."
While airlines and airports are racing to deploy "contactless" processes and digital health passes with Covid-19 vaccination and test certificates, integration of digital passenger services, information and document checks is also being worked upon as a feverish speed.
Those digital platform upgrades that were put together in a hurried manner to address the surge of flight cancellations and refund claims last year because of the pandemic are not the “silver linings" for the post pandemic era, said EasyJet CEO Johan Lundgren.
"Cost bases have been reset" after the low-cost carrier invested in "self-service" capabilities for its booking system, he said. Airlines that have used the crisis for digital upgrades "will come out of this in a more efficient way."