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SINGAPORE: After being hit this year by COVID-19 travel restrictions, experts say the commercial aviation sector could look very different as it tries to build a post-pandemic future.
“The global airline industry is facing an unprecedented crisis and airlines are in survival mode. Many airlines will not have the financial means to survive an indefinite shutdown that, for many, already exceeds half a year, ”Albert Tjoeng, assistant director of corporate communications for Asia Pacific of the International Air Transport Association (IATA) told CNA.
“The airline industry is facing a net loss of $ 84 billion (Singapore $ 114 billion) this year and we do not expect global travel demand to recover to 2019 levels until 2024.”
National airline Singapore Airlines reported a record loss of S $ 1.1 billion for the quarter ending June 30, while Transport Minister Ong Ye Kung pointed out in Parliament that Changi Airport is serving only the 1 , 5% of its usual volume of passengers.
Describing the reactivation of the Changi air hub as a “top national priority” for his ministry, Ong explained some ways in which air travel could be safely resumed.
These include the establishment of travel bubbles with countries and regimes deemed safe, as well as a “rigorous testing regimen” rather than a two-week isolation period for travelers.
READ: Air Travel Bubbles, More Green Lanes as Part of Plans for Singapore to ‘Revive’ Changi Air Hub Amid COVID-19: Ong Ye Kung
“Quarantining incoming passengers has the same impact as closing the border,” said Mr. Tjoeng.
IATA has called for universal and systematic testing for all travelers before departure as a way to reverse the fortunes of the aviation sector in crisis.
“Medical exams before traveling are essential. As test technologies advance in speed, accuracy and scalability, we can see that they play an important role in future travel, ”said Mr. Tjoeng.
However, Singapore Management University transport analyst Terence Fan cautioned that such tests are not foolproof, noting that those in the early stages of infection could show false negatives when tested.
The tests must be accompanied by other measures, such as contact tracing, said Mr Tjoeng, while Associate Professor Fan suggested requiring tourists to adhere to a strict itinerary when traveling to another country, as is the case with packages. tourist.
READ: COVID-19: Rigorous testing could help revive travel, but challenges remain, experts say
RECOVERY AND NEW NORMAL
Even once the coronavirus situation stabilizes, the new normal for air travel could mean having your temperature taken and having to wear a mask during flights, said Professor Jochen Wirtz, vice dean for graduate studies at the School of Business from the National University of Singapore.
He hopes travelers will adapt to such demands, just as they got used to the additional security measures that were imposed after the 9/11 terrorist attacks 19 years ago, like having to take off their shoes.
“I don’t think this is a deciding factor for travel, then little by little it will go back to normal like after 9/11,” he said.
READ: Comment: Do you want to travel again? You don’t have to worry about sitting on an airplane
However, Associate Professor Fan noted that while there was a drop in air travel after 9/11, the impact of COVID-19 on aviation has been much worse.
Major economies such as the United States and Britain are still dealing with the disease, and this will affect the number of travelers arriving in Singapore from those locations, he said.
“I think that is a major problem. Yes, we are going to have a new normal, but this new normal is not so smooth, ”he said, adding that this is likely to continue until an effective vaccine is developed and mass-produced.
Noting IATA’s prediction of a full recovery only in 2024, Associate Professor Fan said there was a “highly variable trajectory” for airlines to recover.
“I think people are just guessing and moving the goalposts, but depending on how China recovers, the goalposts can move both ways,” he said, referring to a rebound in the sector in case of Let Singapore see an influx of Chinese tourists in the future.
Airlines will have to restructure in the wake of COVID-19’s impact on revenue, Associate Professor Fan said, with mergers, acquisitions and bankruptcy proceedings likely to have a chance that carriers will not be able to stay afloat during the pandemic.
He noted how several of the major US airlines did after declining demand after 9/11, noting that the current crisis was much worse.
However, governments may not be willing to consider selling national operators to third parties, Assoc Prof Fan said.
“I think a lot of airlines definitely have to have a restructuring in terms of debt or perhaps a bankruptcy proceeding,” he added.
“But in terms of the merger and acquisition options, it depends on the respective government. And it’s not clear that, at this point, they are open to that.
No airline will emerge unscathed from the current situation, said Shukor Yusof, director of aviation consultancy Endau Analytics.
“The airlines that are better capitalized, well managed and with a clear strategy beyond 2025 will benefit the most,” he added.
Passengers arrive at Singapore’s Changi Airport on June 8, 2020 (File Photo: AFP / Roslan Rahman)
TERMINAL 5 AND THE CHANGI AIR HUB
Plans to build a fifth terminal for Changi Airport have been suspended for two years amid uncertainty about the impact of COVID-19.
Scheduled to be operational sometime in the 2030s, Terminal 5, which would have been part of the sprawling 1,080ha Changi East development, was expected to allow the airport to handle an additional 50 million passengers per year.
Plans for Terminal 5 should continue despite the current recession, Shukor said.
It expects air passenger traffic in Changi to increase beyond 100 million passengers per year after 2030, up from the 85 million passengers per year it can currently handle.
“However, costs must be reduced and the size of the project must be reassessed to be more in line with growth expectations,” Shukor said.
READ: Safely reviving Singapore air hub is the Ministry of Transport’s ‘top and immediate priority’
Associate Professor Fan pointed out that it was necessary to increase the passenger capacity of Changi Airport in case there was a flood of travelers from countries like China, which has largely controlled the outbreak after it started in Wuhan late last year. .
Chinese tourists are the largest market for traveling to Singapore, accounting for around 20 percent of all visitors to the country before the COVID-19 crisis.
However, he cautioned that there should be some flexibility regarding the development of the terminal.
“When you invest in big infrastructure (projects), you need to be flexible, because there are so many uncertainties, so many things that could happen that you just don’t know,” said associate professor Fan.
SIA’s war chest means Singapore could be well placed to maintain its status as an air hub, said independent aviation analyst Brandon Sobie.
He anticipates that other regional centers may see a decline in stature as airlines based there may downsize or even go under.
The recovery of Singapore’s air hub may be even earlier than expected, Shukor said.
“Singapore has shown that it adapts quickly and is agile and this will help in a speedy recovery once the health crisis is fully under control. It would be well before 2024, depending on how 2021 manifests, ”he said.
“For 2020, it is a year of success.”
The 2020 CNA Leadership Summit: Navigating the Post-Pandemic World will discuss through a series of television shows and webinars how companies and organizations have reacted to the pandemic and applied innovative practices.
More details are available at: cna.asia/leadership-summit.
