Airlines brace for summer chaos as wider tech issues remain

A second summer of travel chaos could be ahead as some airlines believe the industry is not “out of the woods yet.”

Already capacity from some airlines and airports is being tightened in a bid to mitigate potential issues.

Lufthansa said in February that it was reducing its 2023 summer schedule by 34,000 flights.

And Amsterdam Schiphol Airport said recently that it was capping its passenger numbers at 66,000 per day in May. While that is part of a wider government strategy to reduce noise around the airport, the change could also ease concerns of a repeat of last summer.

As it stands, the expectation from consumers this summer is that “something will go wrong,” said Tamur Goudarzi Pour, chief commercial officer of Swiss Air Lines, part of the Lufthansa Group.

Speaking last month at the CAPA Airline Leader - Airlines in Transition Summit in Budapest, he said that for airlines now it’s about “anxiety management and managing the possibility that some things might go wrong.” 

Goudarzi Pour was responding to a question about increased consumer expectations post-COVID, but not everyone on the "Distribution, technology and disruption" panel agreed.

Otto Gergye, advisor to the chairman and CEO of Thai Airways, said that expectations are the same but that the “reaction time has not reached the expectations.”

“Technology has not kept up as much as we all talk about it,” he said.

Despite the much discussed legacy technology issues and the desire to move to a modern retailing world, some airlines see much greater, short-term challenges ahead.

Goudarzi Pour said: “We first have to manage the basics of operations for next summer. Some things are definitely future vision, but, short-term, it’s about getting the basics right, which we can do with plasters around the system.”

While the hope is that 2023 will be better than 2022, he said that schedule reliability and securing adequate staff for the summer are key, adding that air traffic control (ATC) also will be an issue.

“In Central Europe, most routes will be affected, so how do you mitigate around punctuality. One third of all delays are due to ATC currently. These are short-term things. Then, we work on those digital servicing elements we can fix in the short-term. For example, rebooking, refund functionality that works, either a chatbot or your phone lines that have fixed answering times and that you have arranged all the partnering for irregular re-accommodation when it happens. These are must-haves for the summer. We are not out of the woods yet.”

Much of the industry has been hoping that technology initiatives around biometrics and baggage handling as well as boosting staffing levels would prevent a repeat of some of last year's issues. 

Core issues

Goudarzi Pour also acknowledged the need to revamp core systems, a challenge he has spoken about in the past.

“All the shiny applications will not change the core" technology that dates back to the 1960s, he said, adding that the industry needs to overhaul its methods for a digital age.

“No airline can do it alone. We have tried it before. This is the second time; we won’t get a third chance.”

Lufthansa Group is part of an initiative from the International Air Transport Association with a 2030 target to have all the “capabilities, standards and business processes” in place for airlines to adopt to move to a more digital retailing environment.

But Gergye said that the reason these large-scale changes don’t happen is the business case is hard to pin down.

“The other aspect which is a hard truth is we talk about orders and retailing, but what is the benefit for the customer? If you are traveling once a year to Asia, that’s 80% of people on planes, so the benefit outside this room is under-appreciated, and we have to remember we need to move the airline to where the market is, not [move] the market to the airline.”

He said services need to be improved and that the industry needs to be “customer relevant, not technology relevant.”

However, IATA recently detailed the business case in its Modern Airline Retailing paper. The organization laid out additional value per passenger to be gleaned from NDC adoption as well as One Order.

Based on a previous McKinsey study, the paper estimates the cost of the transition to more modern retailing would be about $1 to $1 per passenger boarded.

The discussion at the CAPA event is the latest in the ongoing challenge of modernizing airline distribution.

Traction for the new distribution capability (NDC) technology standard, first announced a decade ago, remains slow, although the hope from airlines is that their recent announcement will help boost adoption.

American Airlines went ahead last week with its controversial plan to make some of its content available only via an NDC connection. 

Other carriers such as SAS have backed away from plans to change their distribution models and commercial agreements.

Meanwhile, Air France KLM said recently that it would continue to waive its planned global distribution systems surcharge for the business travel management community until the end of 2023.