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Thoughts on the Postpandemic New Normal in Air Travel

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Thoughts on the Postpandemic New Normal in Air Travel Thoughts on the postpandemic new normal in air travel Received (in revised form): 31st August, 2020 JIM ROBINSON Managing Director, Pegasus Aviation Advisors, France Jim Robinson, Managing Director, Pegasus Aviation Advisors, a boutique strategic advisory group, has over 25 years of experience in the planning and development of aviation infrastructure projects. Although trained as an architect, the majority of his experience has been in international airport development encompassing strategic planning, airport master planning, capital programme development and investment risk analysis. In addition, he leads NexTerm, an innovation research think tank focused on the use of advanced technology to improve airport efficiency and passenger experience. Jim has practical experience working at senior management level serving as Head of Strategic Planning at Dubai International Airport as well as Head of Planning at Abu Dhabi International Airport. In addition, he has a broad background in providing subject matter expertise and advisory services to airport operators, investors and technology companies on projects in Europe, Middle East, Asia and the United States. Narbonne, France Tel: +33 789 41 14 59; E-mail: [email protected] Abstract The coronavirus disease-2019 pandemic will compel permanent transformation of the travel industry and its aviation sector. Key disruptors emerging from the pandemic will include: • Behavioural changes of the traveling public • Increased fear of contracting the virus during travel • Continued uncertainty as to when an effective vaccine will be available, if ever • Severe global economic downturn • Revised procedures to be introduced at airports and onboard aircraft that increase the inconvenience of air travel While the immediate effects of the pandemic may be temporary, interaction with more strategic factors, such as globalisation and the digital economy, could result in disruption of the air travel sector. Issues addressed in this paper include: • Aviation-industry recovery and changes to the business model • Need for regulatory change • Inherent uncertainty in forecasting • Impact on airport operations and development This paper explores the impact of these factors and how they could permanently transform the air travel industry, and how the trends of global digitalisation present a unique opportunity to reinvent the entire aviation sector business model as well as the end-to-end travel experience To achieve this will require meaningful collaboration of the digital technology and air transport sectors to drive innovation and transformational change in response to this challenge for society. Keywords digital, transformation, passenger, experience, trusted, platform © HENRY STEWART PUBLICATIONS 1750-1938 JOURNAL OF AIRPORT MANAGEMENT VOL. 15, NO. 1, 1–14 WINTER 2020 1 JAM0273_ROBINSON.indd 1 23/10/20 4:22 PM ROBINSON INTRODUCTION and telecommuting that may result in a While we are in the midst of a global major shift in business travel behaviour. pandemic, which is having a catastrophic Employers have already concluded that impact on the aviation sector, it is worth working from home brings them bene- reflecting on the potential outcomes fits as they need less offices and can staff and effects the coronavirus disease-2019 outside major urban centres, translating (COVID-19) crisis may have on air travel into lower overheads. Finally, influ- in the longer term. Historically, air travel ences such as climate change and the has been vulnerable to external factors, so-called Greta-effect are expected to such as oil crises, natural disasters, armed affect the overall recovery of air travel conflict, global terrorism and economic in general. downturns, but the sector was able to Although there are many recent fore- eventually recover to precrisis activity cast predictions on how the recovery may and growth levels. Notably, the 2019 unfold, the challenge to both airlines and International Air Transport Association’s airports is how to make any effective (IATA) pre-COVID forecasts predicted decisions with the current uncertainty. a doubling of air traffic by 2030. The As Paul Griffiths, CEO of Dubai key questions are whether this crisis will Airports recently stated, force fundamental changes to the air Social distancing in the longer term is not travel sector and what the recovery will going to be sustainable from an economic or look like. a social perspective. We really need a break- This is a global health crisis that has through in a vaccine or treatment or a very rapidly driven global economies into clever digital platform that will allow us to recession, forced border closures and instantly track. It is inexcusable that we were lockdowns, and significantly increased not better prepared. In the long-term we will unemployment. Contact tracing, social have a digital biometric passport that we distancing, mask wearing and hand wash- carry around with us in the cloud that we can ing are common responses to minimise demonstrate at all points in the journey that contagion. In addition, health officials we are medically fit to travel without being a 1 are concerned about the possibility of hazard to anyone else. second and third waves of the pandemic resulting in further quarantines and lockdowns. As air travel requires human THE PREVACCINE ERA beings to sit or queue for long periods, in At the time of writing (August 2020), close quarters, there is going to be a nat- we are in the early stages of emerging ural fear of close unprotected contact that from the initial pandemic wave. To date, could limit any recovery until an effec- there have been 25 million cases reported tive treatment or vaccine for the disease globally with almost 850,000 deaths.2 is widely available. Although there is a massive effort by In addition, the pandemic is result- governments and the pharmaceutical ing in behavioural changes that could industry to create a vaccine, the process is have long-term effects on all forms rigorous, time consuming and not guar- of human interaction. First, forced anteed to be successful in the foreseeable lockdowns have resulted in a grand future. experiment in ‘work from home’ and Until there is a vaccine available and widespread use of videoconferencing effectively distributed on a global basis, 2 © HENRY STEWART PUBLICATIONS 1750-1938 JOURNAL OF AIRPORT MANAGEMENT VOL. 15, NO. 1, 1–14 WINTER 2020 JAM0273_ROBINSON.indd 2 23/10/20 4:22 PM THOUGHTS ON THE POSTPANDEMIC NEW NORMAL IN AIR TRAVEL we will remain in this pre-New Normal IMPACT ON AIRLINE INDUSTRY IN environment. There are a number of fac- THE NEAR TERM? tors that will inhibit recovery due to the The impact on the airline industry near pandemic including: term is unpredictable because the airlines are unable to operate in a ‘steady state’ ● Travel health risk and uncertainty as to until borders across the globe fully open. when a vaccine will be widely available This makes it difficult to forecast oper- ● Travel restrictions in different parts of ations and develop an effective network the world strategy. The result is that a significant ● Fear of travel attitude linked to high amount of the global airline fleet is cur- death toll from COVID-19 rently inactive, which is unsustainable. ● Deep global recession Network megacarriers relying mostly on long-haul flights, channelled through The air transport industry is in a dire major hubs, face the biggest challenge situation. Initially there has been some and an uncertain future. Fewer long- government economic assistance, aimed haul trips, with travellers shunning at reducing the impact of a global reces- crowded transfer areas, will trigger a sion and job losses, and in the case of significant downsizing of airlines and airlines, to help them survive the imme- wide-body airplane orders, with major diate crisis. European airlines have airport projects being put on hold and sought over €32bn in government relief re-evaluated. Short-haul flights, already since the beginning of the COVID- under attack pre-coronavirus from the 19 crisis in the form of loan and credit flight-shaming movement, could see guarantees. In the United States, the the shift of travellers towards lower airlines received $25bn in grants and carbon-emitting transport means like loans. But these are temporary measures high-speed trains. that cannot be sustainable. IATA esti- While widespread border restrictions mates that airlines globally will lose at remain, low-cost carriers (LCCs) lack- least US$314bn due to the outbreak. We ing large domestic markets will be forced have already seen some of the weaker to rethink their business model. Their airlines go into bankruptcy and there strategy of squeezing as many passengers will likely be more, further increasing as possible on aircraft to generate high overall uncertainty on how the world load factors may become unsustainable. may look in the New Normal. In addition, hygiene requirements to Guillaume Faury, chief executive disinfect aircraft on each turnaround officer of Airbus, stated that the pan- will impact the fundamentals of the demic is the ‘gravest crisis the aerospace LCC business model where quick turn- industry has ever known’. In Europe, around times (30 minutes or less) are for example, there were 80 per cent required. Given many negatives for air fewer flights reported as of June 2020, travel — such as environmental, well- compared to same period in 2019.3 being and passenger experience factors Although travel restrictions are being — certain categories of traveller
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