Commentary: Airlines Must Use Crisis To Reset Fundamentally
When delegates meet in Boston at the International Air Transport Association’s (IATA) first on-site annual general meeting in two years, even getting there will have been a complicated process for those coming from outside of the U.S. While Europe opened up to U.S. travelers earlier this year hoping to spur immediate reciprocal action, the U.S. remained essentially closed in an attempt to contain the spread of the novel coronavirus.
Apart from the fact that travelers from China appear to have transmitted the first COVID-19 cases, it has always been questionable whether blanket travel restrictions put in place by governments have helped to contain the virus. Evidence shows that disciplined behavior (mask wearing, social distancing, etc.) is key wherever one is. The argument to keep travel restrictions in place has become even weaker in regions where large parts of the population have been vaccinated.
Air travel between the U.S. and Europe could have been reopened much sooner, based on clear rules and conditions such as a vaccination mandate with exceptions only for particular medical conditions. The principle that anyone who chooses not to be vaccinated will have to forgo travel is not new. Vaccinations have been required by many countries for decades; COVID-19 travel rules ultimately will be no different.
The blanket travel ban should have been lifted earlier—it has inflicted huge economic damage on an industry sector that the pandemic has hit very hard. It is even more important therefore that the U.S. has finally turned the corner and announced a new regime allowing vaccinated travelers (who have also had to be tested) back in. The rules will cause more complexity in processing and corroborating passenger health status, but that is a small price to pay for a huge a chunk of business to become accessible again.
Only hours after the decision was made public on Sept. 19., airlines and travel agents reported a massive surge in demand for seats on aircraft and other travel-related products and services. Some reported problems dealing with the volume of orders, particularly tour operators putting together complicated travel packages. These are all nice problems to have.
There appears to be a great deal of pent-up demand for transatlantic travel, and demand continues to be held back in other long-haul markets that have not reopened—especially Asia. China is just one example. It is not surprising that so many people want to travel after 18 months of not being able to do so. People are seizing the opportunity to finally visit friends and relatives, go on holidays and resume business travel.
The question many ask is whether long-haul travel will return to precrisis levels and, if so, when. From many different perspectives, that is the wrong question to ask. The industry should not try to restore operations to 2019 levels, and it probably cannot do so anyway: Many aging aircraft are either in long-term storage, retired or in the process of being phased out. These aircraft should not be returned to service. Some were flown simply to fight market share battles and were not profitable anyway. Many airlines have downsized and cannot ramp back up quickly—just ask airline training departments. And in terms of environmental policy, the industry has to demonstrate that it understands its responsibilities. Demand will drive airline operations, but airlines must exercise greater discipline and aim to meet sustainability targets.
The message IATA needs to drive home at the general meeting is that, as painful as this deepest industry crisis has been, it is being exploited as an opportunity to reset. Fleets are being modernized, networks refocused and the commitment to sustainability—both environmentally and in business operations—reinforced.
It is time for the next step, and Boston is the place to take it. This annual general meeting will also be the first for Willie Walsh (pictured) as IATA’s director general. He has the right credentials for what lies ahead. As CEO of International Consolidated Airlines Group (IAG), he not only drove its various airline subsidiaries to previously unheard-of levels of profitability, he also committed to more ambitious environmental targets than the industry as a whole had put forward. To engage that spirit further in the sector will be his next big challenge.
Momentum is already building. The World Economic Forum Clean Skies for Tomorrow initiative just announced a new target of meeting 10% of aviation’s fuel demand with sustainable aviation fuels by 2030. That is way more ambitious than targets put forward previously, including those mandated by the European Commission. It is a good sign from a select group of companies. Now IATA has to turn this into an industry-wide movement.