While travel had its moment under the sun over the past few months thanks to road travel, airlines continue to flounder. A few international airlines such as Virgin Atlantic and Qatar Airways, are experimenting with a new playbook to stay top of the game, in the process offering inspiration to airlines in India.
A whole new playbook being implemented by a few airlines, including hyper-connecting small towns and villages to attract leisure travellers, may change their fortunes.
By all estimate, airlines have been hit the hardest.
Covid has challenged airlines immensely and forced many back to the drawing board, to draw up survival strategies. “The aviation sector is still awaiting safe air corridors, which is proving to be difficult due to constant surges at different times, in different countries,” says Edward Simon, aviation expert and analyst with London-based FGE Consulting Group. “Then there is the liquidity problem they are dealing with. It has seemed like an uphill task.”And yet, there is some hope on the horizon as a few airlines begin experimenting with new ideas.
IATA’s Travel Pass gains ground
Virgin Atlantic, for instance, has begun to accept International Air Transport Association (IATA)’s health passport known as Travel Pass. IATA, incidentally, sets global standards for airline safety which is adhered to by airlines across the world. Using the Travel Pass, a flyer can securely transmit their COVID-19 status to the airline ahead of travel. British Airways is also said to be exploring adapting Travel Pass as a way ahead.
Most airlines globally continue to require flyers to be in possession of a negative COVID-19 test.
Virgin Atlantic is hopeful that a Travel Pass, which updates a flyer’s Covid status, will help streamline operations
Virgin Atlantic tested the IATA Travel Pass software with flight VS131 from London Heathrow to Barbados last week. The aircraft departed at 10:24 am, with 70 passengers were on board the flight.
Corneel Koster, who is the Chief Customer & Operating Officer at Virgin Atlantic, says, “IATA Travel Pass will streamline journeys once the skies reopen. The current paper-only-based processes, which require passengers to carry the negative Covid-19 test, will not be viable as customer numbers increase.”
Neos Airlines became the first Italian airline to experiment with IATA’s Travel Pass
Neos Airlines has also signed up to experiment with IATA’s Travel Pass, becoming the first Italian airline to begin trials with the health passport solution. Singapore Airlines was the first airline to accept Travel Pass on its flight to London last year.
Aggressive expansion using smaller aircraft gives Qatar Airways the edge
Meanwhile, Qatar Airways is beginning to emerge as the airline of choice for long-haul travel globally. It has created a Covid playbook. Simon says Qatar’s national fleet is more likely to respond better to market conditions at present time. “Qatar Airways has increased its market share by adding flights, offering free destination changes, and creating new commercial partnerships.” Between January 1 and April 18, Qatar Airways was conducting almost twice more daily flights than Emirates and almost four times more than Etihad. Its daily flight of 411 flights is fast closing in on the pre-pandemic levels.
Aggressive expansion in terms of number of flights per day and hyper-connectivity has helped Qatar Airways stay ahead of Emirates and Etihad in the long-haul space
It has already expanded to over 450 weekly flights, an aggressive expansion plan if any. John Strickland, Director, JLS Consulting has said that Qatar has benefitted from its more diverse fleet mix, with a large number of efficient, smaller new generation twin jets, a move that Fly Emirates is looking at following by ramping up a sizable fleet of similar aircraft.
The next phase of changes
Ultimately, integrating technology at a high scale may be a game-changer for airlines. “Charter flights, smaller flights, increased digitisation but with the flexibility to cancel and rebook trips easily and artificial intelligence are some of the technologies that will help airlines to bring customers back,” says Simon. Besides, the customer data so collected can be used to analyse and create more effective communication and market tools.
Mckinsey & Co’s 2021 report on overhauling the aviation sector recommends a better pricing and one-stop flights for leisure travellers.
McKinsey & Company, in its report, states that all trends point to the fact that leisure travel, particularly to visit friends and family divided by the pandemic, will bounce first. “Airlines should re-evaluate the economics of their operations, especially long-haul flights. First, a smaller contribution from business traffic could necessitate a different pricing logic. For example, today most carriers price point-to-point nonstop flights at a premium. Travellers who value time over price—mostly business travellers—book these nonstop flights. Leisure travellers, even those travelling in premium classes, are more price-sensitive and may choose an indirect routing. This large gap between nonstop pricing and connect pricing may need to narrow as more airlines begin depending on leisure travel,” their February 2021 report states.
Prime networks may need to be changed. Globally, airlines added many flights over the past few years between hubs and smaller cities, using small-size widebodies such as the Boeing 787. “These flights work because of the high-yielding business demand. With business demand subdued, economics favour larger aircraft flying less frequently. Airlines may find that larger aircraft such as Airbus A350s or Boeing 777s—which have lower unit costs—become the base of the long-haul network.”
Also, lower business-class demand may warrant smaller business-class cabins. “Taking this further, products may shift to better cater to premium-leisure passengers, such as the growth of premium-economy cabins or development of business-class seats more suitable for travelling as couples or groups,” states the McKinsey report.
The experts at McKinsey also suggest that if finances permit, carriers can consider acting counter-cyclically: locking in orders for new aircraft or confirming operating leases now when demand is low. “Aircraft are a significant expense for an airline, making up 10 to 15 per cent of a carrier’s cost base. As lease rates and OEM pricing fluctuate with supply and demand levels, inking deals during a crisis could allow carriers to enjoy a cost advantage for years to come.”
There is a lot that airlines in India can learn from these experiences. “An early adoption of IATA Travel Pass, heightened digitisation but with flexibility, and more importantly, hyper-connecting small cities and towns with small flights and tiny airports will help them work through this crisis,” says Simon.