Has COVID-19 Reshaped Air Travel Forever?

Has COVID-19 Reshaped Air Travel Forever?

August 24, 2020 | Risk Management

The pandemic brought the aviation industry to a standstill, with many airlines cutting up to 90% of their flight capacity and grounding almost all aircraft in their fleet. Many airlines are now using their passenger aircraft as freighters. The International Air Transport Association has estimated that the global aviation industry is likely to face revenue losses of $252 billion in 2020. It is predicted that the effects of the COVID-19 pandemic on the aviation industry will be much more severe than the SARS pandemic and 9/11. Recovery is expected to take between 12 to 24 months, depending on various factors such as economic conditions, stimulus packages offered and airline solvency and liquidity.

A Focused Approach To Resume Air Travel

The aviation industry is instrumental in supporting the growth of local and global economies. Measures can be taken to improve key focus areas, which can prove instrumental to accelerate the demand for passenger air travel and help the industry return toward normalcy. The contribution of all stakeholders in the industry such as airline companies, governments, regulatory bodies, passengers, airline and airport staff will be required to help the industry stand back on its feet.

The confidence of passengers is severely dented due to fear of contracting the virus through travel. Hence, it is imperative for airlines and airports to restore traveler confidence and reassure them that every precaution is being taken to safeguard their health and safety. Airports will require modification to their existing facilities to incorporate additional health screening facilities and cleaning facilities. Advanced technology is already being used with the introduction of touchless temperature checks. Processes which avoid physical contact, such as the development of biometrics to automate passenger recognition and the replacement of travel documentation with facial recognition, would vastly improve passenger experiences and restore confidence in air travel.

Are Airfares Going To Increase?

Airline fares are determined based on supply and demand. While supply is controlled by the airline, demand originates from the customer. However, airlines have some control over demand, as a reduction in airfare can stimulates demand from customers. With a view to increase footfall, it is expected that air fares would be kept low to incentivize consumers to travel. However, as travel picks up, fares are expected to increase again owing to reduced supply and a decrease in fleets, with several airlines having already filed for bankruptcy. As demand increases, this shortage in supply is likely to lead to reduced competition, which will see airlines adopt monopolistic pricing. For travellers, it is likely that they will witness volatility in fares. It is also expected that achieving a balance between demand and supply will take time, leading to increased fares in the medium term.

Ensuring Passenger Safety is a Priority

With safety becoming the top priority for passengers, airlines are implementing various safety measures to protect their customers. All airlines are adopting multiple layers of stringent cleaning and disinfecting and are making wearing masks mandatory on board. Airlines like Cathay Pacific and Emirates have installed HEPA (High Efficiency Particulate Arresters) aircraft filtrations systems in their cabins, which filters more than 99% of dust particles and airborne viruses and bacteria. Cathay Pacific has also stopped providing hot towels, pillows, blankets, and magazines on high-risk routes. American Airlines stopped serving snacks and fruits baskets on its key international flights. A few airlines have also reduced their sales capacity with a view to have fewer passengers on-board. Southwest Airlines has put a cap on the number of passengers based on aircraft capacity. Frontier Airlines mandated its passengers to fill out a health acknowledgement form before boarding. All airlines have also made temperature checks compulsory before boarding, which ensures that passengers with symptoms are not allowed to board, ensuring safety of other passengers.

Future Outlook

The impact of the pandemic on the aviation industry has been immense and has changed the future of air travel. Business travel in the short term will require strict validation since companies have restricted the number of employees traveling. With countries having stringent regulations to let travellers through, documentation will increase, and only temporary visas may be issued. There is an increased possibility of testing being introduced in the airport, which will require travellers to arrive hours before departure. This will also lead to an increased immigration queue and longer wait times. Airlines will have an increased focus on their air filtration systems onboard and air quality will likely become a feature to be advertised in the future. Flying is not expected to return to pre-pandemic levels in the near term. It is estimated that it will take at least a couple of years, if not longer, for the industry to return to pre-pandemic levels. The pandemic has led to a drastic change in aviation and reshaped the air travel ecosystem forever.

 

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John Piatek

Vice President, Consulting

John has over 15 years of strategy consulting experience managing several large-scale engagements with leading global clients.

At GEP, John is responsible for partnering with leading CPG and retail enterprises on strategy, supply chain and management initiatives. John is also the Chair of GEP’s Thought Leadership Council.

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