Commentary: Airlines have little choice but to not be airlines for a few years
SINGAPORE: We volition wing once again. Information technology just might happen much afterwards for most of usa, in 2024 and beyond.
Despite the roll out of vaccines and the opening of economies, the patchy global coverage in vaccinations and the fasten in infection rates of COVID-xix in various countries indicate it will be some time before air passenger travel returns to 2022 levels.
The International Air Transport Association (IATA) forecasted that in an optimistic scenario the air travel market would reach 38 per cent of 2022 levels in 2022 and airlines would spend US$75 billion over the year to maintain operations.
In a pessimistic scenario, the air travel market would merely amount to 33 per cent of 2022 levels and airlines would spend United states$95 billion.
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To complicate matters, the recovery volition vary across regions.
An Aviation Forecast Report by the global consulting service visitor ICF found that 60 per cent of their respondents polled in Asia thought the region will encounter total recovery in less than 12 months.
However, those polled in Europe and Northward America believed recovery could take up to two years or more than.
ENSURING SURVIVAL
Various airlines beyond the globe would essentially demand to do three things to maintain their survival and across.
First, ensure diversified revenue streams. Second, to maintain cadre skills and competencies. Third, transform their business models for a post COVID-19 market.
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The difficulty is that every bit airlines take a shorter-term view on improving cost savings, they will need to balance that with the longer-term imperative to recalibrate their business models for a unlike market environment and time to come customer demands. Airlines must do more than sell seats.
Microsoft founder Nib Gates thinks equally much equally 50 per cent of concern travel will be lost subsequently the pandemic while Jeffrey Goh, main executive of Star Alliance – the world'due south largest airline group – thinks this segment will shrink by about 30 per cent with primal structural changes in store.
Airlines could avoid this slump by offering discounts, promotions and other perks, such as concierge services, to retain every bit much of the business travel segment as possible.
Many may have to cut back on business organization-grade seats and retrofit with a larger economy-form section to maximise acquirement from the recreational travel segment.
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Some airlines may find even doing and then insufficient every bit the majority of their acquirement come from business organization class tickets, as well every bit first-class, not economic system. According to PwC, business travel can generate every bit much as 75 per cent of the revenue for some airlines, especially on international flights.
Such airlines may detect information technology necessary to venture into new business streams in order to stay afloat for the next three years.
AIRASIA KNOWS IT CAN'T BE AN AIRLINE FOR A WHILE
AirAsia has been a sterling example. Under Tony Fernandes' leadership, the group has been innovative and moved aggressively into alternate revenue streams including food commitment, grocery commitment and fintech.
With its underutilised fleet of planes, converting some into air freight carriers would enable AirAsia to service fresh, surging consumer demands in logistics.
No wonder, AirAsia's logistics company called Teleport has rolled out a digital network to modernise its air cargo operations using Freightchain, a blockchain engineering.
It's also muscling into the no-frills food delivery space with AirAsia Food starting in Kuala Lumpur in May 2022 and expanding to other Malaysian cities, Singapore and more than ASEAN cities past end-2021.
It has traded off certainty over where your driver is for reliability and lower costs.
AirAsia Food in Singapore has approximately 500 riders from logistics company Teleport launched before in Singapore. In that location are 24 food and beverage outlets on the AirAsia Food platform with more than 300 operators in the process of coming on lath.
With economies of scale, AirAsia also intends to move into fresh produce delivery with fresh fish from Nihon or short ribs from Korea, imported and delivered to customers' homes within 48 hours.
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Looking ahead, Air Asia has plans for air taxi and drone delivery services, which could enable it to strengthen its brand as a company that gets yous things and where y'all need to be, while assuasive it to motility into e-commerce, e-payments, and the financial fintech marketplace.
SCOOT MOVES STAFF ELSEWHERE TO KEEP THEM Current
Some other model is Scoot, from the Singapore Airlines (SIA) group, which pivoted swiftly to move its staff into secondary employment opportunities, by partnering with unions and the Singapore Government, thereby allowing it to offload man majuscule costs on its balance sheets.
Past mid-2020, Scoot had approximately 400 motel crew and pilots engaged in temporary supporting roles for Singapore'south COVID-19 response in hospitals and elsewhere.
Several SIA crew were similarly also deployed and retrained, including equally healthcare ambassadors.
Scoot was also i of the start airlines to start operating cargo charters as an culling revenue stream by activating its fleet and even carrying cargo in aircraft cabins to optimise load capacity.
This redeployment of underemployed airline crew to other service sectors like healthcare ticked several requirements at one time. Starting time, the redeployment ensured these crew maintained loftier standards of skills like communication, customer service and personal grooming.
2d, since the skills sets required in these new roles did not vary greatly from the cadre and strategic capabilities expected of the crew in the aviation sector, they can easily exist redeployed into their old roles in one case global travel picks up.
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Third, cabin crew, such every bit those from SIA who are well-known for their exemplary service mental attitude and disposition, have created positive spillover furnishings in the organisations and roles they were redeployed to past raising the level and quality of client service there and creating a positive prototype of SIA.
DP Dental, a dental exercise, which had taken on board five SIA cabin coiffure members, reported an comeback in the quality of customer service.
This is not surprising equally SIA has long had a first-class reputation as a leading service provider with crew demonstrating strong operational excellence and service values.
SIA has now established a new arm to offer preparation programmes in areas like client service and crisis direction to interested companies through a new training unit of measurement under its Singapore Airlines University.
THESE AIRLINES KNOW AIR TRAVEL WILL STAY Depression FOR A WHILE
Such efforts may appear as short-term terminate-gap measures to create new acquirement streams and to ensure that their staff remain relevant in their core skills and work experiences.
But there is every reason to believe that air travel volition never exist the same again equally what it was before COVID-19.
In such a scenario, airlines will have to either fold, consolidate or pivot chop-chop to new segments and businesses temporarily.
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In other words, in gild to survive as an airline all the same in business come 2024, airlines can't be airlines for a piffling while.
Dr Faizal Yahya is a Senior Research Fellow at the Institute of Policy Studies, Lee Kuan Yew Schoolhouse of Public Policy, National University of Singapore.
Source: https://cnalifestyle.channelnewsasia.com/commentary/commentary-airlines-have-little-choice-not-be-airlines-few-years-283031
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