* items include readers letters
3 MAY 2021
BTN also goes out by email every Sunday night at midnight (UK time). To view this edition click here.
The Business Travel News
PO Box 758
Edgware HA8 4QF
+44 (0)20 8952 8383
© 2021 Business Travel News Ltd.
The Airline industry
More challenges ahead
But when will there be a renaissance?
JLS Consulting was established in 2003, providing strategic insight, guidance and advisory services concerning the air transport industry for a wide range of clients including airports, airlines and investors. Director, John Strickland has held senior positions including network planning and revenue management with a number of airlines including British Caledonian, British Airways, KLMuk and Buzz. John provides expert independent business and financial commentary on the sector for leading media, including the BBC, Sky, Bloomberg, CNN and the Financial Times. He is a regular conference chair and moderator at industry events, frequently interviewing leading senior executives. John Strickland is also visiting professor in Airline Business Strategy at Coventry University. He is a much-respected voice in the industry.
It is more than 12 months since I wrote in BTN about the challenges for the airline industry, stemming from the Covid-19 pandemic. I believed then that the worse would be behind us in a matter of months. Sadly, as is now only too apparent, we are into the second year of the crisis.
Damage is still being inflicted on the industry and apart from a small number of large domestic markets, the volume of passenger flying globally remains emaciated. Buoyant cargo demand has been the one saving grace, generating valuable revenue for many airlines.
Cash is king
Cash conservation and the raising of liquidity, where possible, have been the watchwords for airline management. This is reflected in early financial results being reported for the first quarter of 2021 which reveal reduced, though still substantial, losses being incurred.
Pent up demand
The term “pent up demand” is being used heavily and there is plenty of evidence that it exists. People want to fly when the opportunity is available and they can do so with confidence. However, we are far from knowing when that might be, thus summer will be far from normal, more a case of one step forward, two steps back. Those schedules that operate will be patchy and still surrounded by uncertainty. Some European leisure routes are likely to see periods of strong performance for parts of the summer with a likely more modest and stilted return to long-haul markets, some opening up of UK-US services could be one piece of good news.
Airlines are moving ahead
The industry has made great strides since last year, not only in reducing the haemorrhaging, but in building confidence that aviation is capable of sustaining a safe travel experience. Much work has been done, particularly via IATA, in defining testing regimes and in delivering technological solutions to manage passenger documentation for tests, vaccinations and information on the travel requirements of each country.
Airlines have adapted schedules, as best they can, around constantly shifting quarantines and border closures. Despite their financial plight, they have offered customers great flexibility to change and refund tickets.
We have also had great news on the vaccine front. Who could have predicted a year ago, that we would now have several effective vaccines, or that the UK would be a world leader in the rollout of its vaccination programme? This is excellent but of course we have to look at the global stage and recognise that no one is safe until everyone is safe. The tragic situation in India is a clear reminder that the virus is far from beaten and that with new variants, further challenges lie ahead. The industry needs to proceed with caution.
Disappointing Government Response
We are still waiting for more clarity on travel when it comes to governments, not only in the UK, but elsewhere. It is certainly not straightforward to manage the situation we all face, but the industry has struggled to gain adequate traction in the political arena, despite putting forward many concrete proposals and delivering tangible progress. The effort to engage must continue with energy, forcefulness and unity, founded on facts and always recognising that public confidence is critical and that we still face many unknowns.
Recovery for the industry will take considerable time, the path will remain difficult and unpredictable, yet even in the midst of the crisis we see innovation. Many existing airlines are adapting their business models, reviewing their products and modernising their fleets. Start-ups are seizing the opportunity to test out completely new concepts. Some will work, many will fail, but the best ideas will stick and become more widely adopted. The digital age is going to underpin new approaches and dynamism to airline network planning, pricing and customer focus.
The stoic approach of expecting the worst and hoping for the best mirrors my own outlook. There will be a renaissance for the industry that I love, but exactly when and in what form, might not be something we can visualise right now.
All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum
John Hunt, Kingston, UK
Based on the less daunting problems of 9/11 it will take at least 5 years for things to return to anywhere near normal and whilst the industry has made great strides in being environmentally friendly, the objectionists will be in full flow .