EDITORIAL: Airlines’ bleakest winter
Far too many airlines enter the year without sufficient cash to get through the first quarter. For those carriers, the early distribution of vaccines will not come in time to sufficiently lift demand for air travel. Even where government aid was available for aviation in 2020, it will likely be harder to raise and more limited in scope the second time around. This will be a bleak winter and there will be failures.
But it will not be a winter without hope. Vaccine distribution has begun sooner than most dared to believe, certainly well inside the air transport industry’s most optimistic expectations. But global testing regimes are still urgently needed to bridge the gap before coronavirus inoculation is widespread and governments must do more to make test-and-fly programs the default versus quarantines. However, the longer this dreadful pandemic endures, the more scientists and governments learn about COVID-19 and its effects and the better informed they will become.
Airlines, too, must learn from this crisis like no other. As businesses with inherently fixed, high operating costs, it is reckless to not have a year’s cash reserve at minimum. Somehow, airlines will have to work out how to become more adaptable, able to shrink or grow without the horrific pain that the pandemic shrinkage and cost-cutting inflicted.
Even more challenging, they will need to learn to become better service providers. While in survival mode, cash is king for those airlines astute enough to have it. But as the recovery trickles in and people start to reconsider travel options, the crown will return to the customer. And airlines, in truth, have not always shone as customer service beacons, especially when times were good and demand outstripped capacity. There are a few airlines whose consistent dedication to customer service will garner continued loyalty when people are ready to fly again. There are too many others for whom individuals and corporations may see an opportunity after months of not flying, to try another brand. Ultimately, that will be good for the consumer and the industry. Frequent-flyer programs have for too long empowered airlines to not raise service standards.
In other ways, too, the industry can emerge from this crisis restructured and be the better for it. Far from dropping their commitments to sustainability, some are choosing to go significantly beyond ICAO’s CORSIA carbon offsetting goals.
United Airlines’ declaration that it aims to achieve full carbon neutrality by 2050 demonstrates an understanding that customers, corporations and investors expect eco-responsibility by their travel suppliers and investment choices. With older aircraft being retired rapidly and a travel demand gap, there’s probably never been a better time for airlines to raise their sustainability bars.
In an interview in December, IATA chief economist Brian Pearce noted, “Out of these crises and shocks, good things normally happen. Typically, it focuses the mind and you get some of the structural changes that were more difficult to achieve in better times.”
Out of a brutal year, and in all likelihood a grueling winter, a stronger industry can emerge.