Aviation plays a crucial role as an enabler in the global tourism industry. It connects some of the most remote regions around the world with the global tourism source markets, bringing forth a substantial economic impact transforming their local economies. With a massive injection of foreign exchange along with a rise of employment opportunities across a wide spectrum of specializations, the global aviation industry and tourism are interconnected, and the powerful symbiotic relationship between both sectors are certainly undeniable.
Even for the Maldives, it was the construction of their international airport that paved the way for tourism in the country. With the first aircraft landing on the slotted steel runway on 10th of April 1962, the main international gateway at Hulhule’ island has come a long way since its humble beginnings. Over the past few years, with rapid growth of international connectivity and a huge increase of flight frequency, Velana International Airport was seeing a significant growth in passenger traffic with nearly 40 international and 50 domestic flights operating on a daily basis.
Alexandre de Juniac, Director General and CEO of the International Air Transport Association (IATA) estimates 2021 losses to be at USD 15.8 billion, which would be the worst ever financial performance record in the history of aviation.
Just as any other country in the world, the Maldives saw a complete collapse of air traffic with a devastating blow to the entire industry chain. With prolonged lockdowns and travel restrictions, the global impact of the COVID-19 pandemic is so severe that experts are predicting an extremely slow recovery process, where they believe it will be by 2024 when we start seeing a global traffic close to what we had back in 2019. This is if we do not have further setbacks along the way. Many airlines have already collapsed from the effects of the pandemic. Flybe, one of Europe’s largest regional carriers that caters to over 8 million passengers a year collapsed in early March, followed by Virgin Australia and South Africa’s flag carrier South African Airways. The number of bankruptcies already in double digits, he warns that unless international air travel can find its footing in this new post pandemic world, we will see many more casualties in the coming months.
The world is changing, and this is happening at the speed of light. The Aviation sector will need to make swift decisions in adapting their business operations to the current environment. From addressing the needed changes to the customer journey to major shifts in business operations and financial management, the post pandemic recovery will require adaptations to make it through to the other side.
As it is, the impact on the aviation industry by the COVID-19 pandemic has surpassed many of the previous pandemics in recent history. The road to recovery will begin with the customer. The aviation sector will need to take on a more customer centric approach in order to adapt their framework to fit the “new normal”. Traffic is not expected to reach pre-pandemic levels any time soon. Therefore, it will be important for stakeholders to address the measures they can take to adjust to the changing consumer expectations alongside adjustments to operational efficiencies which would yield commercial sustainability.
The Maldives has been seeing some positive signs in recovery since the reopening of the borders. The increasing flight connections and frequencies serve as a great indicator to the changing dynamics as well. In November 2020, there were 14 international flights operating to the Maldives, while it shot up to 26 by the end of December. With the latest update from the Ministry of Tourism, there are now a total of 28 international carriers traveling to the Maldives, which includes legacy airlines such as Emirates Airlines, Qatar Airways and Singapore Airlines, along with some new faces to this sector. With the growing number of travelers from India, Vistara has commenced a new route from Mumbai to the Maldives from the 03rd of March 2021. This would be the third Indian carrier joining the market, with GoAir and IndiGo already serving the same route.
Traveler Confidence in Safety & Security
The highest priority should now be given towards increasing traveler confidence, and instilling trust in the service providers. Consumer priorities are also now leaning towards their safety first. As per studies conducted, they are even willing to pay more to confirm physical distancing between them and the rest of the passengers, and this need is even greater in families with children.
Information is Power
Information can also be a huge component in instilling confidence with travelers. Operators will need to ensure they maintain compliance with globally accredited health and safety protocols while at the same time communicating this information clearly to passengers. Further to this, timely and frequent communication along the customer journey is also essential. Giving them information on where the traffic is, when surfaces were last cleaned, que traffic info, etc.
Deployment of High-Tech Solutions
There are also quite a few points where AI integration and automation could be deployed to facilitate better crowd flow management, which is an absolute necessity at a time like this. Boarding systems automated with mobile activations alongside 3D cameras that can capture and process real-time density analytics to measure the degree of risk in airport spaces, etc.
Partnerships & Affiliations
Some airlines are even launching fairly odd collaborations in order to enhance their safety protocols. British Airways recently partnered up with Reckitt Benkiser, the creator of the globally renowned brand Dettol, where their products will be introduced at all points of the customer journey from ground to the air. The newly launched cleaning protocol is also endorsed by the London School of Hygiene and Tropical Medicine, giving the entire initiative a lot more weight and credibility in instilling confidence in travelers.
Shift from Direct to Hub & Spoke
Even before the pandemic, this has been a hot topic in the industry. With the advancement of technology in the aviation industry, the point to point (P2P) carriers were taking on a bigger chunk of the market share over connecting flights. The driving force behind this segment was actually the business travelers. However, it is the leisure travel segment that is expected to recover sooner than the business travel segment. Leisure travelers are much more price sensitive, and therefore makes up the bigger portion of international connecting traffic. In effect, now the entire system is in reverse, where the hub and spoke model has taken the lead, driven by economics and the need for airlines to embrace operational efficiency. McKinsey & Company reports that the return of business travel would be a multiyear recovery and will return in phases. With nearly an year of lockdowns and social restrictions, people are longing to escape and get in touch with the great outdoors.
Post crisis, airlines will need to analyze and re-build their hub systems to enhance their overall efficiencies and streamline their operations. For instance, sum hubs within close proximities may be duplicating certain routes, which may be better served being switched to other areas. These decisions will require in-depth studies on demand projections of passenger traffic. Although this may seem like a given, today with the ever-changing market scape, historical patterns are no longer fitting as referral points. New technologies and solutions will need to be deployed to track real time information for accurate assessments.
One of the biggest stressors for connecting flights are the layovers. As there are numerous cogs and wheels in motion, failure in one segment of the entire machine could result in a cascading effect. Shorter connections have higher risk of experiencing delays or other service issues which could create chaos. Therefore, longer layovers can work well in increasing operational resilience while at the same time, creating a more comfortable transit experience for passengers. The idea of coming into contact with thousands of people from all corners of the world during transit may not be the most ideal thing for many people. However, the reduction of P2P flights might be over the horizon for many carriers in order to lower operational costs, although flight operators may look to use these flights as premium routes in order to yield, while transit options offer just a little more flexibility for greater volume.
Carriers will now focus a lot more on network efficiencies, alongside trimming down their fleets by losing the wide-bodied aircrafts for the smaller and more cost-efficient models. Singapore Airlines for instance has now grounded their entire fleet of A380’s. The German carrier Lufthansa also announced the retirement of its fleet of A380’s and A340-600’S. With a reduced load factor, it makes very little financial sense to be flying these behemoths, which carries a significant operational cost. Many of the major carriers are now reviewing their fleet strategies and have already started discussions with Airbus and Boeing, the two biggest aircraft suppliers regarding their existing orders. Lufthansa along with Emirates are looking to switch to smaller long-haul passenger jets over the bigger aircrafts. The Dubai based carrier, Emirates is currently heavily burdened with their existing orders, and are now looking to switch from the 77X to the 787 Dreamliner as they now face a completely different reality to what they had previously forecasted. This will be the case for many carriers, and some will not have the backing they need to sustain liquidity in order to pull them through these tough times.
Operating an airline is extremely costly. Fuel costs, insurance and taxes, they all add up into the millions. To keep up with the expenses, carriers depend on maximizing their load factor. And this is crucial for budget carriers, who have grown in their numbers exponentially in the past decade. Geared with high seating density to maximize their load, this is how budget airlines keep their ticket prices so low. However, with social distancing now in play, this will be a major challenge for these carriers, as the new norm in many countries restrict carriers to carry passengers at full capacity in order to maintain safety measures.
Travel itself is freedom. The desire will always be there and will continue to grow in the days to come. The recovery will call for a greater cooperation between all stakeholders, from the government, businesses to the local communities. After all, it is an interconnected ecosystem where we are all reliant upon each other. Therefore, working together will be crucial for the success across all sectors. Through this event, companies will need to put a greater focus on customer-centricity, as the consumer marketplace is evolving rapidly. Businesses will need to reimagine new ways to operate and transform their organizations to embrace the new realities.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change”
– Charles Darwin (1809-1882)