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SINGAPORE: We will fly again. It could happen much later for most of us, in 2024 and beyond.
Despite vaccine rollouts and opening economies, uneven global vaccine coverage and rising rates of COVID-19 infection in several countries indicate that it will be some time before air passenger travel returns to the United States. 2019 levels.
The International Air Transport Association (IATA) predicted that, in an optimistic scenario, the air travel market would reach 38 percent of 2019 levels in 2021 and airlines would spend $ 75 billion during the year to maintain their operations. .
In a pessimistic scenario, the air travel market would only rise to 33 percent of 2019 levels and airlines would spend $ 95 billion.
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To complicate matters, the recovery will vary from region to region.
An aviation forecast report from global consulting services company ICF found that 60 percent of respondents in Asia thought the region would experience a full recovery in less than 12 months.
However, respondents in Europe and North America believed that recovery could take up to two years or more.
ENSURE SURVIVAL
Various airlines around the world would essentially need to do three things to maintain their survival and more.
First, ensure diversified income streams. Second, maintain basic skills and competencies. Third, transform your business models for a post-COVID-19 market.
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The difficulty is that as airlines take a short-term view to improve cost savings, they will need to balance that with the long-term imperative of recalibrating their business models for a different market environment and future customer demands. Airlines must do more than sell seats.
Microsoft founder Bill Gates believes that up to 50 percent of business travel will be lost after the pandemic, while Jeffrey Goh, CEO of Star Alliance, the world’s largest airline group, believes this segment will be reduced by 30 percent with key structural changes. in the store.
A couple and their children dine in business class AFP / ROSLAN RAHMAN
Airlines could avoid this drop by offering discounts, promotions and other benefits, such as concierge services, to retain as much of the business travel segment as possible.
Many may have to downsize business class seats and modernize them with a larger economy class section to maximize revenue from the recreational travel segment.
READ: Comment: The aviation sector should recover sooner than expected
Some airlines may even find it insufficient, as most of their revenue comes from business class tickets, as well as first class tickets, not economy. According to PwC, business travel can generate up to 75 percent of some airlines’ revenue, especially on international flights.
These airlines may have the need to venture into new commercial streams to stay afloat for the next three years.
AIRASIA KNOWS THAT IT CANNOT BE AN AIRLINE AT THE MOMENT
AirAsia has been an excellent example. Under Tony Fernandes’ leadership, the group has been innovative and aggressively moved toward alternative sources of income including food delivery, grocery delivery, and financial technology.
With its aircraft fleet underutilized, converting some to air freight carriers would allow AirAsia to meet new and growing consumer demands for logistics.
It is no wonder that AirAsia logistics company Teleport has implemented a digital network to modernize its air cargo operations using Freightchain, a blockchain technology.
AirAsia planes are seen parked at Kuala Lumpur International Airport 2 amid the COVID-19 outbreak in Sepang, Malaysia on October 6, 2020 (File Photo: Reuters / Lim Huey Teng).
It is also entering the no-frills food delivery space with AirAsia Food starting in Kuala Lumpur in May 2020 and expanding to other cities in Malaysia, Singapore, and more ASEAN cities by the end of 2021.
You have traded certainty about where your driver is for reliability and lower costs.
AirAsia Food in Singapore has approximately 500 passengers from the logistics company Teleport, previously launched in Singapore. There are 24 food and beverage outlets on the AirAsia Food platform with more than 300 operators in the process of incorporation.
With economies of scale, AirAsia also intends to move to fresh product delivery with fresh fish from Japan or baby back ribs from Korea, imported and delivered to customers’ homes within 48 hours.
READ: Comment: What is the rationale for AirAsia entering the Singapore food delivery market?
Going forward, Air Asia has plans for air taxi and drone delivery services, which could allow it to strengthen its brand as a company that brings you things and where you need to be, while allowing you to move into e-commerce and business. electronic payments. and the fintech financial market.
SCOOT MOVES STAFF TO ANOTHER LOCATION TO KEEP IT UPDATED
Another model is Singapore Airlines Group’s (SIA) Scoot, which quickly turned around to shift its staff to secondary job opportunities, partnering with unions and the Singapore government, allowing it to offload human capital costs onto its balance sheets.
By mid-2020, Scoot had approximately 400 cabin crew and pilots engaged in temporary support roles for Singapore’s COVID-19 response in hospitals and elsewhere.
Noor Seha, a Scoot cabin crew and care ambassador, provides on-the-job training on blood pressure measurement for a nursing home resident. (Photo: Ren Ci Hospital)
Similarly, several SIA crew members were also redeployed and retrained, including as healthcare ambassadors.
Scoot was also one of the first airlines to start operating cargo charters as an alternative revenue stream by activating its fleet and even transporting cargo in aircraft cabins to optimize cargo capacity.
This redeployment of underemployed airline crews to other service sectors such as healthcare met several requirements at once. First, the redeployment ensured that this team maintained high standards of skills such as communication, customer service, and grooming.
Second, since the skill sets required in these new roles did not vary much from the core and strategic capabilities expected of the crew in the aviation sector, they can easily be reassigned to their previous roles once the jobs are resumed global travel.
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Third, cabin crews, like the one at SIA who are known for their exemplary service attitude and disposition, have created positive spill-over effects on the organizations and roles they were reassigned to by raising the level and quality of service the customer there and create a positive image of SIA.
DP Dental, a dental practice, which had recruited five SIA cabin crew members, reported an improvement in the quality of customer service.
This is not surprising, as SIA has long had a splendid reputation as a leading service provider with a team that demonstrates strong operational excellence and service values.
SIA has now established a new arm to offer training programs in areas such as customer service and crisis management to interested companies through a new training unit at its Singapore Airlines Academy.
THESE AIRLINES KNOW THAT AIR TRAVEL WILL STAY LOW FOR A WHILE
These efforts may appear as short-term interim measures to create new sources of income and ensure that your staff remain relevant in their basic skills and work experiences.
The first seat of Singapore Airlines’ A380 @ Changi restaurant took place on the afternoon of October 24, 2020 (Photo: SIA).
But there are many reasons to believe that air travel will never be the same as it was before COVID-19.
In such a scenario, airlines will have to quickly withdraw, consolidate or switch to new segments and businesses temporarily.
READ: Comment: This is why Singapore needs to save its airlines and the aviation sector.
In other words, to survive as an airline still operating in 2024, airlines cannot be airlines for a while.
Dr. Faizal Yahya is Principal Investigator at the Institute for Policy Studies at the Lee Kuan Yew School of Public Policy at the National University of Singapore.
