The aviation sector is sure to emerge from the coronavirus crisis looking very different.
With IATA forecasts of a $314 billion revenue loss and 25 million jobs at stake, airlines and airports could close if passengers volumes do not recover.
No one can safely predict how long it will take for the industry to bounce back, but aviation experts are hoping for a return to 80% of pre-COVID-19 levels in two to three years.
During Flightplan, an online event put together by Apex and Inmarsat, futurist Rohit Talwar of Fast Future revealed how airlines fall into three broad categories in terms of their preparedness to deal with the current crisis.
The first group includes those that were reasonably well prepared and had good risk management processes in place. Talwar believes they may have considered the impact of a pandemic but had not thought about an event that caused a total shutdown.
These airlines have been able to put crisis plans into action and are now thinking about how they are going to emerge once they can fly again.
A second group were not expecting COVID-19 and “felt a level of shock.” Now, however, they seem to be managing day-to-day operators but are not really thinking too far ahead.
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The final group were not at all prepared and never expected something like the pandemic. According to Talwar, these airlines “are shocked to the core”, had no real plans in place and are still trying to recover.
He adds that this group is looking to industry organizations and government to take the lead on how to get out of the situation.
Talwar went on to discuss four scenarios for airline recovery.
They are part of research being carried out by Fast Future and Future Travel Experience on the impact of the current crisis on aviation, with the first element presented during the event this week.
Economic recovery, industry collaboration
Each model is dependent not only on economic recovery but the level of cohesion and collaboration within aviation as well as across the entire value chain.
- Survival of the safest is a scenario where there is a deep global recession, with the travel industry remaining fragmented and there are many business failures. In this model airports are forced to close because passenger volumes are not high enough to resume operations. Those airlines, and airports, that do survive are able to demonstrate that they are putting passengers traveling with them at risk.
- A second scenario, dubbed Hope and Glory, centers on economic recovery but a travel industry that is not working together and is “relying on hope” to get through. Carriers that manage to work closely with partners recover fastest.
- Love in a Cold Climate is the third model with the whole industry working together across the value chain but the economy has not recovered and therefore, the industry does not see the returns it had hoped for.
- Finally comes Sealed and Secure, a model described as strong and rapid global recovery with “nations and global institutions collaborating to drive economic growth.” Travel is unrecognizable in this scenario, with the travel experience “hermetically sealed” and passengers having to demonstrate being virus-free whether via antibody testing or a vaccination.
Talwar adds that airports will have different zones, which will be mirrored by airlines, enabling passengers to only come into contact with those falling into the same bracket.
Hotels and other elements of the industry would also have to take up similar initiatives.
Aviation investment
The research from Fast Future and Future Travel Experience says that 47% of executives expect aviation to take six to 12 months to recover and about a similar number expect a period of more than 12 months.
Respondents were also asked about areas for increased or decreased investment in the future, with 68% arguing that digital transformation should get more attention and 60% want automation and artificial intelligence seeing greater investment.
Furthermore, 54% believe environmental initiatives will get more investment and 54% see innovation in general as getting more backing.
The biggest areas of declining investment are the construction of new airport terminals (55% ) and new aircraft orders (75%).
Talwar says that while this is the “greatest uncertainty it [aviation] has ever faced” and there will be failures, startups airlines or investment in building new airports will continue.
He adds that there could be “radically different business models” with a greater focus on technology and automation, “designed for the era we are in.”