What's Happening in the Travel Industry

What’s Happening In The Airline Travel Industry

Kerwin McKenzie Uncategorized

The State of the Airline Travel Industry

by Cushrow Parakh – Aviation Analyst

To say COVID-19 has turned the world upside down in 2020 would be an understatement. All the world’s incredible and expensive military power has proven to be worthless and no match whatsoever for a microscopic particle that has destroyed the lives of hundreds of millions and inflicted incalculable damage on businesses around the globe. Let’s look at the state of the airline travel industry.

Most decimated has been the travel and hospitality industries but commercial airlines have been particularly hard-hit with the sudden, drastic, and ongoing drop in passenger volumes. Adding to the carriers’ woes, the fear of infection, border closings, and severe quarantine requirements in countries around the world have continued to stifle customer demand for both domestic and international flights. Pushing several to the financial brink and beyond, this pandemic has confronted airlines across the world with their worst ever crisis but, in a silver lining of sorts, has more than validated the old adage of “necessity being the mother of invention.”

In their desperate attempts to stay afloat, grounded carriers have been forced to:

  • quickly and significantly streamline their operations
  • retire or store unprofitable aircraft especially the venerable Boeing 747 and innovative Airbus A380
  • delay or cancel deliveries of new airplanes, ground (some of) their current fleet
  • and shed staff.

Creative ways used by airlines to raise revenue

Not to be trivialized, they have also used unparalleled creativity to reassure a hesitant flying public, stimulate a traffic rebound, and especially create alternate sources of revenue. Any revenue. And their sometimes-unconventional methods to raise funds have also been rewarded universally with enthusiastic responses by a clearly travel-starved citizenry.

Flights to nowhere

Curiously, this trend has largely been confined to the Asia Pacific region and was kicked off in August with Eva Air being the first to offer a “flight to nowhere” on Taiwan’s Father’s Day. Catering to pent-up travel demand and the continuing draw of its Hello Kitty themed aircraft, it offered domestic residents an opportunity to get away, if only for about three hours, without going anywhere (i.e. departing from and arriving at the same airport) and doing so in a responsible, socially distanced manner.  Customers reacted eagerly and the flight was sold out shortly after it went on sale. Staying in local airspace and offering views of Taiwanese geography, customers were also treated to an onboard gourmet meal and travel giveaways.  

Buoyed by the experience of Eva Air, domestic competitors including China Airlines, StarLux Airlines, and Tigerair Taiwan quickly offered similar packages with varying flight patterns and met equivalent levels of sales success and interest by flying enthusiasts. Before long, other international airlines like Asiana Airlines, ANA, Royal Brunei Airlines, Jeju Air, Hong Kong Airlines, and HK Express, among others, then followed suit with offerings ranging from full service to bare-bones and experienced the same resounding response from passengers.

Not to be outdone, Qantas took things a step further in September by offering its luxe – and pricey – “Great Southern Land” Boeing 787 flight of 7 hours to nowhere from Sydney, including low level fly-pasts of Australian landmarks, that promptly sold out in a reported 10 minutes. Later in October, Qantas upped the ante even further and cheekily offered a now-fully-booked early December “flight to somewhere” from Sydney and centered around an overnight stay at a luxury resort near Uluru (né Ayers Rock) in central Australia. It should be mentioned that regional heavyweight Singapore Airlines also attempted to capitalize on this trend but quickly bowed to pressure from climate activists and scrubbed their plans.

Also, in October and in a very rare European operation of this kind, Czech Republic-based Smartwings operated three quick – and full – Hungarian-landscape-viewing flights to nowhere on the same day from Budapest for interested folks.

That, not surprisingly, did not mark the end to this successful movement. In early November Thai Airways grandly announced its late November “Magical Flying Experience” flight to nowhere – but with a religious twist.  The airline scheduled a three-hour flight from Bangkok, overflying 99 Buddhist sites around Thailand, complete with in-flight chanting, onboard history lessons, and a celebrity fortune teller (yes, that is apparently a thing). Needless to say, it was hugely successful and sold out an hour after sales began.

Has this trend finally run its course and out of steam? Only time will tell but not yet!  In mid-November, Eva Air announced yet another intriguing iteration. With its “Fly! Love is in the air” venture, in partnership with travel company Mobius’ You and Me division, the carrier offered three popular Christmas Day, New Year’s Eve, and New Years Day speed dating flights over Taiwan from Taipei. Only open to 40 young, single, male and female university graduates per departure, each experience included gourmet onboard snacks and either a pre-or post-flight “romantic” meal on the ground to facilitate fruitful interaction between couples.

Several airlines have fended off strong protests from environmentalists against these “unnecessary” flights with carbon offsetting initiatives but their ingenuity to raise cash has fortunately not ended there.

Alternate revenue streams

In August, Singapore Airlines announced that it was diversifying its revenue streams into non-airline partnerships. Capitalizing on its renowned customer service, it deployed some of its staff to provide specialized training at a Singapore hospital. Since then, it has announced plans to spin off its new service-skills-centric Singapore Airlines Academy for corporate training and other non-airline business ventures.

Leveraging airline flight kitchen facilities

Stymied in its attempts to join the flights to nowhere crowd, Singapore Airlines, unsurprisingly, thought very much outside the proverbial box and then announced its “Restaurant A380 @ Changi” concept in October with the ability to not only tour but also eat a custom meal onboard its largest aircraft at its Changi airport hub. Initially scheduled as a limited experiment, overwhelming demand and an almost instant sell-out forced the carrier to extent the program and add additional timings and dates. It also opened up its training center with four days of fee-based tours in late November with opportunities for interaction with cabin crew, wine tasting, and simulator flying. Changi airport, on its own, opened up its onsite attractions to locals for weekend getaways and also offered its Jewel passenger lounge for a charge in 4-hour time increments with included wi-fi, beverages, and snacks.

Thai Airways, in addition to its flight to nowhere, went further in early September. Taking a page out of Air Asia’s book and its successful café in Kuala Lumpur serving inflight meals to customers on the ground, the airline opened the “Royal Orchid Dining Experience” at its headquarters in Bangkok. Turning an old cafeteria into a mock airplane cabin, accessible with real airstairs, boarding-pass reservation slips, outfitted with aircraft seats, tables created from aircraft wheels, and staffed with volunteer cabin crew, the airline began serving its onboard meal favorites to everyone. At last report, the service was catering to almost 800 diners (2,000 meals) a day across three “classes of service”. The airline also opened its flight simulators to the general population and, perhaps most unusually, started selling Thai Airways-branded popular native dough fritter snack packs at stores around Bangkok. Monthly revenue from just this venture alone is averaging more than USD 300,000 encouraging the beleaguered airline to now look at other means to franchise its flight kitchen services. Its new “Re-life” program, turning discarded aircraft safety vests and onboard rafts into “fashionable” handbags and totes, has also proved successful beyond expectations and items are now only available by pre-order.

Other variations in onboard flight meal sales have also proved to be an attractive option for cash-strapped airlines. From Thai Airways’ takeaway choices at its Bangkok café, to Cathay Pacific’s food truck service in Tung Chung to Finnair’s frozen dinner options at Helsinki supermarkets, carriers have found a way to earn incremental revenue and, maybe more importantly, keep their flight kitchens running to avoid the huge expense involved in closing and later restarting operations. Perhaps no one goes beyond Singapore Airlines in this regard. Customers missing its fabled premium cabin entrées can now also order meals that can be home delivered.  Each one comes with the airline’s signature satay appetizer and a select choice of wine or champagne but, for an additional fee, a private chef will be included to properly reheat and serve the meal at a residence.

Recycling aircraft parts for sale

Aircraft parts, and re-fashioned portions thereof have also proven to be even more irresistible to aviation enthusiasts across the world. Lufthansa found great success in 2019 with consumer sales via its new “Lufthansa Upcycling” program. Parting out its oldest Airbus A320, the winglets, doors, and other fuselage and interior fittings were turned into high-priced and very popular key rings, tables, doors, bags, and other consumer items.  Plans are now afoot to do the same with its older Airbus 340-600 planes.

In September, Qantas too made the same discovery. Selling well over 1,000 items of hardware from its recently withdrawn Boeing 747-400s, items like USD 1,500 fully stocked “pre-loved” bar carts sold out in a day.

British Airways, in a fit of marketing hyperbole, has since followed others’ lead to “recreate a magical flying experience at home” with retired Boeing 747-400 memorabilia. In late November the airline started to empty out its warehouses of unused supplies and has included everything from champagne flutes, blankets, hot towels, casserole dishes, and dinnerware to meal trolleys and food canisters for sale. To no one’s surprise, several items have already been snapped up by a very receptive public and are no longer available.

Other special schemes

Other carriers have decided on different options to get passengers back onboard. Mainland Chinese ones, led by China Eastern Airlines, also played their part to boost domestic tourism and business travel by adapting their popular unlimited weekend domestic flight packages to weekday departures.

Qantas, in collaboration with a travel partner, has also re-introduced its unique Antarctica flights during the November 2020 – February 2021 time frame. With the Boeing 787 and its larger windows taking over from the departed Boeing 747, fares for these trips range from about USD 850 to almost USD 6,000. Operating from several Australian state capitals, these approximately 12-hour carbon-offset flights offer passengers low-altitude views of icebergs and the Antarctic continent with full onboard service and lectures from experts without the need for passports or onerous quarantine restrictions upon return.

Technological advances

Innovations and advancements by airlines, airports, corporations, and government agencies towards a touchless and thereby safer journey continue within aircraft cabins and around the entire itinerary as well. ANA is testing a means to turn the bathroom experience in flight into a more hands-free operation by incorporating new door handles that can be operated with an elbow. Meanwhile, HAECO  is developing sensors for automated aircraft restroom doors and Delta Air Lines is starting the installation of antimicrobial lavatory lighting on its fleet.  Planes at carriers like Qatar Airways, United Airlines, and Delta Air Lines, among several others, are being thoroughly and frequently sanitized with robots spraying long lasting anti-microbial sprays on all high touch surfaces in the cabin.  Specially designed hand-held ultraviolet light wands quickly sterilize other hard-to-reach interior surfaces. Corsair has even tested a germicidal seat-back tray table film that remains effective and safe, even after heavy use, for several months.

United Airlines, in particular, has partnered with cleaning specialist The Clorox Company using portable devices to efficiently disinfect high traffic areas and surfaces at several airport terminals and will soon roll the procedure out to its outstations in the U.S.  For its own domestic hubs Delta Air Lines has collaborated with government agencies to introduce anti-microbial security bins that minimize the presence of microbes throughout the life cycle of the containers.

Biometric access at airports

Dubai-based Emirates Airline and a few U.S. carriers, have also begun to implement curb-to-gate biometric access at airports like Dubai, Atlanta, Los Angeles, and Salt Lake City to minimize surface contact and the resulting possibility of infection.  Now Delta Air Lines is starting to roll out this novel camera-based procedure on a large scale to all domestic passengers at its Detroit hub and competitors are certain to follow.

Improving the overall travel experience

As business traffic has tanked following the onset of national and international entry restrictions, United Airlines is focusing on leisure travel worldwide and also making it easier for frugal consumers to plan their holidays. It has pioneered an easy new “Map Search” feature on its website that assists prospective passengers choose a destination type (beach, culture, national park, etc.) of their choice based on their location, date of travel, and flight budget. To minimize unwelcome last-minute travel surprises for its customers it has also published its “Destination Travel Guide”, a comprehensive list of protocols and procedures required of travelers by destination countries and cities the airline serves.

The airline has also collaborated with the U.S. Department of Defense in an extensive scientific research project that has validated and publicized the overwhelming safety of contained aircraft cabins given aircraft ventilation systems, the pre-existing cleaning protocols, and high efficiency onboard HEPA air filters.  

Eliminating unpopular fees

To persuade skittish passengers to travel, or at least make bookings, most large U.S. airlines have also made it easier and cheaper for customers to modify flight plans by eliminating their much-reviled high change fees. Restrictions on their cheapest fares (Basic Economy in the U.S.) have also been eased to appeal to the budget-conscious.

Introducing free health insurance

Comprehensive COVID-19 health insurance packages are now a complimentary feature of flights booked on several carriers like Air Canada, WestJet, Virgin Atlantic, Eurowings, Finnair, Emirates Airline, Etihad Airways, Ethiopian Airlines, and others to further ease the concerns of their passengers if they were to fall ill with COVID during their journey. 

Blocking seats for onboard social distancing

Some airlines blocked middle seats from occupancy on their aircraft to reinforce onboard physical distancing recommendations but most have since lifted those restrictions as the long-term negative financial implications of this practice become apparent and the inherent safety and purity of cabin air is confirmed by studies.

Making COVID-19 testing more convenient

Airports and airlines across continents have installed convenient COVID-19 testing centers (some free) on their properties to assist passengers meet specific entry requirements of destinations. Other carriers offer fee-based and simple mail-in or drive-through opportunities for passengers to get tested before their departure. In fact, Helsinki’s Vantaa airport, among other facilities in Europe and the U.S., is even trialing a voluntary process with sniffer dogs to rapidly test for COVID-19 infections in arriving passengers with close to 100% accuracy so far.

Financial distress and opportunities for airlines

As expected, the dramatic and long-term drop in passenger counts has driven several airlines into bankruptcy protection.  AeroMexico, LATAM Airlines, Avianca, Virgin Australia, Thai Airways, and South African Airways are perhaps among the best known of this group. However, several others, such as Vistara, SpiceJet, United Airlines, British Airways, Virgin Atlantic, Southwest Airlines, Wizz Air, Rex, etc., have used this travel downturn as an opportunity to expand service into cities and airports eager for more traffic. As illogical as that may sound, increasing flights to new locations now enables them to gain a toehold in previously lucrative, competitive markets with high barriers to entry while using aircraft that would otherwise have been stored.

Several other ventures have taken advantage of super-low aircraft lease rates, reduced airport charges, and an oversupply of airline staff, all results of the pandemic, to plan new service. Names like OWG, Heston Airlines, FlyPOP, FlyBig, Lift Airlines, and PLAY, among several others could soon become familiar names in the industry. Or not.  

Yet more airlines that were about to begin commercial service before the pandemic hit, e.g. Breeze Airways, StarLux Airlines, EGO Airways, Zipair, et al have decided to take a more cautious approach and either delay launch or postpone expansion.

 

Summary

Like it or not, the worldwide airline business is an essential service, much-loved and derided at the same time, and has proven its resilience over and over again.  It has never stopped evolving with the times and continues to slog through the almost constant ups and downs that characterize it. Never before, however, have air carriers had to deal with something so devastating for so long a duration but the creative destruction they continue to initiate to survive this latest of their travails only makes them more miraculous. And even more irreplaceable. And we, the flying public, are very grateful for that.