Air Crash Investigation: The Airline Industry in the ‘New Normal’
Source: Kham / Reuters
In light of the COVID-19 pandemic, the airline industry has been one of the hardest hit. After a decade of steady growth, demand entered a nosedive as countries rapidly shut borders and governments restricted travel in March. In the United States, overall travel demand has reduced by approximately 70%. Airlines have never before been hit simultaneously by such a high risk of infection as well as a declining economy. Many travellers are incredibly reluctant to travel until their faith is restored that airlines are handling the situation appropriately, and more importantly, that the health crisis is improving.
The global industry has been predicted not to recover till 2024 by the International Air Transport Association, particularly due to continual COVID-19 spikes in the United States. Boneyards are filling up with the carcasses of unwanted planes. In the United States, the situation is dire as airlines do everything to keep their companies going. Whilst the government has provided $25 billion in grants and loans to the industry, the pandemic has still had a debilitating impact on employment. United Airlines has furloughed 16,370 employees. American Airlines has furloughed 19,000 employees so far, and still plans to cut 40,000 jobs.
Whilst there has been some recovery in leisure traffic recently, the same recovery is not evident in business traffic. The pandemic has caused companies to seriously reconsider the costs of travel expenses. Businesses have seen that Zoom and other communication platforms are excellent substitutes for in-person meetings, they also cost considerably less. This has introduced a new competitor for airlines, one they may not be equipped to challenge. On some routes, business travelers have contributed up to 75% of a flight’s profits. It has yet to be seen whether airlines will once again be able to attract business travelers, or whether businesses will alter their business models, believing that the savings of online platforms outweigh the costs of remote interaction across locations.
“Whilst fares may be down, flying has once again become a luxury, one for the healthy and privileged, those who are able to buy an extra seat next to them or receive testing before and after flying.”
Typically lethargic, the airline industry has now had to mobilise at unprecedented speeds in order to salvage its profits. Airlines have been forced to initiate damaging waves of furloughing employees, selling planes, cancelling flights, and altering routes. Meanwhile, the industry has also scrambled to come up with regulations for quarantine rules, restrictions on health histories for travellers, as well as the kinds of medical equipment must be kept on board, in order to ensure safe travel and restore the faith of passengers. Whilst fares may be down, flying has once again become a luxury, one for the healthy and privileged, those who are able to buy an extra seat next to them or receive testing before and after flying.
In passenger’s priorities, convenience and costs have been superseded by health and safety. Additional considerations must be made before flying. A passenger must analyse airlines’ cleaning procedures, the flexibility of ticket cancellation policies, whether or not they provide free masks and/or limit seating capacity to allow for social distancing. For airlines to remain solvent in the ‘new normal,’ they must provide such services to recapture the trust of customers and regain demand. Airlines are increasingly offering testing and advocating for the government to create a testing standard for airlines. With increased rapid testing, passengers can avoid quarantine and the odds that an infected person will board a plane are greatly lowered, giving customers the confidence they need to begin travelling. Testing may very well be the best and only way to revive this crashing industry.
“For airlines, the health and safety of passengers and employees will perpetually be at the forefront of decision making. Any other alternative will damage the lives of many as well as the businesses’ chances at survival.”
In the ‘new normal’ of the pandemic, airlines are being forced to continuously alter and refine their processes. For airlines, the health and safety of passengers and employees will perpetually be at the forefront of decision making. Any other alternative will damage the lives of many as well as the businesses’ chances at survival. Already, smaller, less profitable airlines are unable to compete in an increasingly niche market with such high costs of health and safety standards. Such airlines will either go out of business or be acquired by larger carriers. Some airlines have begun marketing their health and safety standards, many will likely follow suit, in order to advertise the testing and social distancing practices that they are adopting and capture the limited demand remaining. The processes of flying and airports are also likely to change, as flights become more functional, flying from point-to-point and on time, in order to avoid excessive time spent on connecting flights or in transit airports. The very nature of planes may change themselves, as airlines retain smaller fleets with single-aisle planes, to maintain social distancing as much as possible.
A vaccine has been touted as the only permanent solution to save the future of flight. Until such a solution comes, COVID-19 will continue to accelerate decision making in the airline industry, forcing airlines to refine costs and push for the most robust health and safety practices, to regain the trust of the flyer.