The airline industry has been clobbered the hardest by the COVID-19 pandemic and sunk to its lowest level in years. The current damage is more severe than 9/11 and the financial crisis of 2007–09 put together. As of April 2020, more than 90 percent percent of countries had banned entry to non-residents and non-citizens, resulting in an enormous financial hit.
COVID-19 Has Hit Airlines Harder Than 9/11 & the 2008 Financial Crisis Combined
The International Air Transport Association (IATA) estimates that the aviation industry losses will amount to more than $300 billion, which is more than 50 percent of the entire 2019 revenue. Given the fact that more than 60 percent of the entire global fleet was grounded by April, it is no mystery why the estimates are grim. However, some indications, like the research by IATA, show that around 20 percent of passengers are ready to resume their usual flying routine the moment restrictions are loosened.
Many airlines have filed for financial aid from governments. The European governments have agreed on €12.7 billion in bailout programs to help airlines maintain the cash flow and ensure liquidity. The United States government has approved a $58 billion bailout program which consists of payroll grants for the workforce and company loans.
Despite the help, many airlines have filed for bankruptcy, throwing the future of airlines in a tailspin. Whatever the predictions for the future might be, it is certain the flight experience will be quite different in the immediate future.
Adapting to the New Standards in Aviation
The world after COVID-19 won’t be the same, and a return to the pre-corona business operations as the usual form is regarded as a pipe dream by many pundits. Both travelers and airlines will experience changes with on-board and on the ground experience. All changes will begin with the imminent introduction of additional health-protection measures. Social distances imply the changes in seating arrangements, which could cost the airlines the middle seats and force changes to the fleet, as they will need to use bigger aircraft to meet the demand.
The health inspection procedures have already been ramped-up, with companies like Emirates introducing blood tests that passengers must take in order to check the presence of COVID-19 antibodies in their blood.
The inflight food policies will also be altered. The inflight meal plans will be scaled back. On shorter flights will water and canned beverages will be served. With longer trips, passengers might be given a bottle of water and snacks upon boarding, with no onboard food purchase allowed. Food plans will be scaled back even on long-haul flights.
New Health Ancillary Programs
New opportunities for ancillary revenue boosts have also risen from this situation, and many add-on features and services are already in development. Some companies might allow customers to purchase special “safety-packages” which guarantee that the airlines will take care of the passengers while on-board and in case of any extraordinary events. These “safety-packages” might include seats enclosed with glass barriers so that you’re not in your seat neighbor’s airspace. The trick here is to understand what kind of health ancillary services customers will be willing to pay for.
Forward-thinking airlines will rely on digital technology to drive revenue and maintain customer satisfaction. Introducing digital platforms that allow services such as parking, food and beverage pre-order, baggage upgrades, car hire, and hotels will personalize the offers and improve customer satisfaction. Chat-based customer services and services from call centers could be amplified, resulting in numerous advantages for users and airlines.
The way all these changes will affect the pricing and other aspects of air travel in the long-term is still up for discussion in large part. However, one thing is clear: only adaptation to the new reality is a guarantee of survival.