As everyone in the industry knows, aviation is in a crisis. Thousands of planes are grounded, passenger traffic is all but non-existent, airports are ghost towns and thousands of aviation workers have lost their jobs or find their jobs at risk as a result of the COVID-19 coronavirus.
What the aviation industry of the future will look like – spoiler alert, no one can say for sure at this point – was the topic of an Aviation Week webinar, the communication means du jour for much of the world suffering through lockdowns or shelter-in-place orders.
What the experts in the field told the audience was that the aviation industry of the future will look nothing like the aviation industry of the recent past because as one panellist put it, this will not be the last viral pandemic faced by the human race.
Aviation industry members can expect to see:
- Major changes in airport infrastructure as countries look to prevent possible new viral infections with extensive screenings of arriving passengers, especially “foreigners”.
- Countries like China, South Korea, Australia and others with extensive domestic aviation routes will likely see a recovery in the industry there first.
- International air traffic will likely take much, much longer to recover than domestic traffic.
- Nationalism, both the usual kind and the “nationalisation” of air carriers could become the norm as governments seek to keep their flag carriers flying.
- Consolidation of airlines is likely to occur as debt-laden carriers are gobbled up by those with stronger balance sheets.
Panellist members on the webinar included: Peter Harbison, founder and chairman emeritus of CAPA; Jens Flottau, executive editor for commercial at Aviation Week; and Nigel Mayes, senior vice president consulting and product development at ASM Global Routes Development Consultants along with Karen Walker of Air Transport World.
Walker reminded the audience and panellists that aviation has been hit by a sledgehammer and basically fallen off a cliff, but Harbison tried to start things off with a comment that growth in China’s domestic traffic seems to be creeping up because the country’s government is “keen to show things are getting back to normal”. He cautioned against other countries trying to declare victory over the virus too soon because of second and third waves of infections that can be worse than the first.
Aviation Week’s Flottau said he was worried about future governmental roles in the industry as airlines take bailouts or loans or other relief measures, but said some airlines will be in bankruptcy soon if governments don’t intervene. He said national governments in places like Germany for example, will not let their flag carrier Lufthansa fail and the “industry will be smaller and the role of governments will be increased with consequences we don’t know yet. The role of governments will be a much stronger force, they will own airlines, they will expect something in return (for bailouts). What does that mean in terms of bilateral services? It’s going to be a very different regulatory framework and one that people won’t like.”
Mayes told the group the effects on airports now are that capital spending has ceased in many cases, terminals are closing, as Singapore announced Monday, operating hours are being reduced and people are being laid off. Mayes also said airports in the future would “try to own the passenger” more than the airlines and would drive up efforts to sell more ancillary products.
In an online poll conducted during the webinar, about 60 percent said the industry would recover to earlier estimated levels within one to two years, but 32 percent said it likely would be more than two years before the industry got back to “normal”.
Harbison took great issue with the poll’s results, calling it “hopelessly optimistic to think traffic will get back to normal in two years”, mainly because of the “massive unemployment” currently happening globally and the talk of not just a global recession, but a full-blown “depression” in the world economy. He pointed out that it took two to three years for air traffic to return following the 9/11 attacks as well as the 2008-2009 financial crisis and said international traffic will come back “much, much slower”.
“Imagine the health issues,” Harbison said. “Countries will be reluctant to allow (possible) virus carriers to come across their borders. Imagine what the arrivals halls will look like. It’s a massive infrastructure problem for the airports.”
The question of leisure travel versus corporate travel was a hot topic as well with most of the group agreeing that it is likely leisure travel will take longer to recover than corporate travel, but several also pointed out that the “bean counters” at companies find corporate travel an “easy target” for cutting costs while others pointed out that “virtual meetings” are working, to some extent, but said conferences and conventions will return once it is deemed safe because humans want to “connect” and people can get more done in one day at a conference than via online meetings.
Another interesting topic was the design of aircraft themselves in the age of the coronavirus. Seat capacity on planes could actually be decreased to allow for more spacing between passengers because people worry about who they sit next to.
And the question of who will pay for all these changes was, of course, uppermost in the minds of the participants. Who will pay for enhanced arrival health screenings? Who will pay for possibly government-mandated space layouts for airliner cabins?
“It depends on the countries,” said Flottau. “Some will support the costs, some will not, and that will turn into a competitive advantage or disadvantage. Fees for Gulf carriers were very low and they benefitted from that. If you fly in a network that is in a low-fee area you benefit, if your network is in a high-fee area you are at a disadvantage.”
One thing is certain as Harbison pointed out. The aviation industry is “really going to have to change because this is not the only virus that will hit us. There will be more to come.”