Credit – https://www.businessinsider.in
With fewer people travelling, airline RPKs (Revenue Passenger Kilometres) show little sign of recovery. Travel restrictions due to the pandemic and fear of travel has already punished (and will continue) to punish the aviation and travel industries for some time.
Worldwide, thousands of workers have been laid off; several others have been handed salary cuts. Aircraft manufacturers have cut production, directly affecting thousands of supporting ancillary industries. Airports are bleeding losses and so is the entire travel and tourism industry. COVID 19 has changed the way that people travel – right from ticket purchase, visas, getting to the airport, airport experience and also the way that aircraft are cleaned and maintained. What’s important now is to forecast how long will this last, the time frame for recovery and who will come out victorious.
In 2019, over 100,000 commercial flights a day lifted 4 billion passengers across the globe, supported by 10 million direct jobs. The aerospace industry booked sales of around USD 600 billion while the travel industry booked global sales of another USD 700 billion. The airline/travel industry has been growing historically at around 4% annually (except a few blips). However, this year sales have dropped already by 50% which is a huge loss. 35% of the global aircraft fleet is parked on ground.
(Figures are approximate)
All is not so bad, especially for companies and people who are agile. The gaps are already visible and it would bode well for those with the ability to quickly adapt to market changes.
Legacy carriers which were contentedly bloated till last year are cutting costs. Workers have been laid off or suspended and salaries have been cut across the board. Those who are not adapting to this crisis will go bankrupt – leaving huge gaps in the market. Airlines with buy options on aircraft do not have money to pay for them and are scurrying to sell them cheap. Staff is willing to work for lesser salaries. All this makes it a good case for small challenger low cost carriers.
Currently 50% of the global fleet is owned directly by airlines. This needs to change to a lease model. Just like any service provider, airlines now need to focus on sales, marketing and services, rather than paying debt for owned aircraft. This applies particularly to government owned airlines.
Empty airports mean spare slots. A lot of money can be saved by slot redistribution – slots don’t come cheap. Domestic travel is in, especially for visiting family and friends and business travel is out as more businesses go online as is international travel. This is proven by the fact that as a percentage basis, more wide body aircraft are currently on ground than narrow body aircraft.
A follower of aviation news would have seen several airlines retiring the Boeing 747 in the past few months. While there are several reasons for that, one of the main ones is fuel efficiency – even during this low fuel price era. Smarter airlines (and the cash rich ones) are now thinking ‘green’ and will use this lull to renew their their fleets with modern fuel efficient aircraft.
Aviation as an industry is training intensive, with recurrent checks and tests for most staff and crew. A typical training scenario means that the crew will be unable to perform his/her primary duty, which means additional crew to fill in. Additionally, training centres are far and wide, necessitating travel to different locations by crews increasing cost and time for the airline.
For those considering a career in aviation, the future is hopeful. While IATA predicts that a full recovery of passenger numbers back to 2019 levels could take three years, newer technologies can bring down the cost of training. Evidence-based training rather than competency based training can certify a pilot using lower-level simulation devices, and adaptive training can help pilots graduate in less time. Technology exists in static FTDs (Flight Training Devices) to replicate or even better FFSs (Full Flight Simulators) in experiential training at a fraction of the price.
Flight schools adopting evidence-based training programs such as the Multi-crew Pilot License (MPL) offer students a more affordable fast track to the flight deck of a major airline. While this has been implemented in several countries, this has not happened in India.
Virtual LMSs (Learning Management Systems) have the ability to impart instruction in innovative ways. Flight schools have been conducting virtual classes but the future is in adapting to a top quality LMS which offers standardised training at low cost across the world.
Sustainability is the key to survival now. While there was a clarion call to sustainability, it was not ever seriously implemented or followed in the industry. Disruption is also something to watch out for. There will be heartaches and mergers, layoffs and hiring, better technology and a green vision. Aviation will bounce back and when it does it will change for the better.