Thinking Forward: How the Airline Industry Emerges from the COVID-19 Pandemic – with Somas Appavou, Director, Kayan Aviation Capital Holding
Since the onset of COVID-19, KARV Communications has remained in close contact with members of our global network, including industry leaders who are thinking beyond the immediate impact of the pandemic and focusing on strategies for emerging and thriving in a new business landscape. Leadership in the era of COVID-19 requires evolved approaches to navigating disrupted supply chains, modified business operations, sharp declines in consumer demand and the addition of enhanced health and safety features. The very survival of countless small businesses, brands and even industries is dependent upon successfully implementing adaptive business models for 2020 and beyond.
Today KARV speaks with Somas Appavou about the concrete steps the airline industry is taking to get passengers on planes and global business back on track. Appavou is a former Airbus executive and more recently served as the CEO of Air Mauritius. He is currently the Director of Kayan Aviation Capital Holding, an aircraft leasing and asset management company based in London, and a Partner at Aerotechnic Middle East, an aircraft parts distributor.
How would you describe the current state of the airline industry?
Needless to say, the impact of COVID-19 upon the airline industry and aircraft OEMs (Original Equipment Manufacturers) has been traumatic. While we are seeing varying approaches to the reopening of commercial aviation between airlines and aviation authorities, we must acknowledge that the complete supply chain and aviation ecosystem are in idle mode with millions of jobs and a vast number of industries dependent upon travel at risk. There are roughly 770 airlines flying 26,000 aircraft around the globe on a daily basis—over 70% of which were grounded for months—which is truly unprecedented territory for an industry that serves as the circulatory system of the world. Travel and Tourism represents more than 10% of global GDP and 1 out of 10 jobs around the world (330 million jobs total), so the importance of the industry cannot be overstated.
Yet there are reasons for optimism. This is an industry that has proven itself to be incredibly resilient. We’ve successfully emerged from a number of crises in very recent history, including SARS, the attacks on September 11th and periods of economic turmoil, to name a few. We have some of the brightest minds working hard to establish new guidelines and practices that will ensure that the airline industry is able to weather this storm as well.
Looking around the corner, what changes should we expect to see in the airline industry in the near future? What are some key developments or innovations you’re anticipating?
Across the industry we are likely to see a number of nationalisations, consolidations through acquisitions, contraction of operations into regionalisation and, sadly, a substantial number of liquidations. The larger national airlines which were profitable prior to the pandemic will likely receive cash injections from governments to sustain operations with the obligation of maintaining employment and preserving the industry.
While a vaccination would crucially trigger accelerated growth, in the meantime the industry will develop specific processes, procedures and technologies to manage all aspects of the pandemic with crucial support from the International Civil Aviation Organization and International Air Transport Association. Innovation will also be critical. For example, suppliers are proposing new technologies in coatings of airplane surfaces that prevent the proliferation of viruses and bacteria. In passenger and baggage handling services we will see fewer human interactions and more automation. Wearing masks for the duration of flights and mandatory medical checks may be a nuisance for some passengers, but essential to keeping planes in the air.
What will your industry look like a year from now? Five years from now?
Resembling an “L-shaped” curve, the full recovery of the airline industry will take at least 24 to 36 months once a vaccine is available. Until then, air fares will be extremely competitive as airlines work diligently to fight the fear of travelling. We anticipate that cheap fares will encourage travellers to risk domestic or regional travel, but the recovery of long-haul operations will be dependent upon the availability of a vaccine.
In the coming years airfares will increase over time due to the decline of COVID-19 and the disappearance of airlines. Larger, consolidated operators will look to minimize recovery time and pay back loans received.
In terms of communication, what messages do people need to hear to return to your business? How are you reaching them with this message, and what response are you seeing?
Travelers need to know that safety is in the DNA of our industry and careful measures are being put in place from the moment of check-in, to when they order a coffee in the terminal to when they arrive at their destination. Customer service and social media will always play a crucial role for airlines in disseminating these messages. As air travel is fundamental to how humans live their lives and how global business is conducted, it remains critical that airlines, airports and key airline industries work in close coordination to communicate accurately and consistently the major changes that are being implemented to ensure the safety of passengers. While air travel may never look exactly the same as it did just a few months ago, our passion for travel and adventure will surely be the catalyst for taking to the skies once again.