COVID-19: what opportunities for the travel industry?

You have to be either oblivious or optimistic to think that COVID-19 can, in some form, represent an alternative for the travel industry. However, like any other sector, it has to deal with it and therefore two options can be presented.

The first is to cry in front of years of growth reduced to nothing, finances collapsing with no income to put in front of them, orders for aircrafts that seem all of a sudden out of proportion….Even if presenting oneself as an expiatory victim and waiting for the end of the flood to see if one is still alive is a very common attitude, it is not – and all past crises show it – the best way to seize the few chances to improve things if they exist.

The second is to say that in every crisis there is an opportunity (ironically, in Chinese the same word is used for both) and if you can’t control what happens, you might as well try to take advantage of what you can. It often won’t be much, sometimes you’ll just hope that it will pay off in the long run, but lost for lost you might as well die with your weapons in your hands.

Retire the least cost-effective devices

One thing is certain: the airlines will emerge from the crisis slimmed down in terms of fleet, with a return to “normal” traffic not to be expected for a long time. But losing weight is not always a bad thing because losing weight does not always mean getting weaker. One can even come out of a diet in better shape than before, the question is to know if you lose muscle or fat.

In the current state of affairs, what we have seen is that many airlines have already decided to remove certain aircraft from their fleets, with no hope of seeing them in service again. B747s, A380s, A340s and even old generation A320s which were to be replaced by more fuel efficient versions.

Why were they kept? Because the more efficient aircrafts that were to replace them would only be delivered in a few years and in the meantime, given the demand, it was necessary to meet the demand even with low or medium efficiency aircraft.

The problem is solved: while waiting for the arrival of new aircrafts in 1 or 2 years, there is no more reason to maintain the same level of offer, so we might as well get rid of the least profitable devices.

The same number of clients and the same level of income will not be found again soon. However, the average profitability of each seat sold will be higher. Less revenue but more profitability.

It won’t erase all that has been lost and we could have done without it, but even if you are looking for an opportunity to get rid of old aircrafts without losing too much, it is there.

Anticipate investments

So of course you need to have cash but it is possible, especially for heavy infrastructures.

When I saw that Singapore airport was going to close its terminal 2 for 18 months I almost fell off my chair. Yes the situation is dramatic but 18 months irrevocably…it is still a bit much.

In fact, the T2 was to close for expansion and renovation for almost 4 years. The expected reduction in traffic made it possible to anticipate and accelerate the work so that it would last less time and have less impact on traffic and the experience of passengers who will use the airport when it reopens.

We are starting to see hotels anticipating work and renovations as well. If you want to run with a zero or low occupancy rate for 1 year, you might as well do today the work that was planned in 1 year so as not to have the double punishment: a horrible year 2020 and being closed when it returns to normal.

In the same way, Etihad is not satisfied with immobilizing 80% of its fleet, but takes advantage of this to anticipate all its maintenance operations. Again, the idea is to avoid having to ground aircraft for minor or major operations when they could have been grounded when they could not fly. This is the largest maintenance operation in its history.

Improve the customer experience

There is little doubt that for a longer or shorter period of time and for health reasons it will not be possible to use the aircraft cabins to their full capacity and that more space will have to be left between passengers. Here again, instead of crying in front of facts we can’t do anything about, it can be a very good way to take advantage of this lower density to improve comfort and service, and why not change the perception of the customer who will perceive a kind of premiumization. Here it’s all about attitude and attention…it doesn’t cost much.

And if it should last for years, as some people think it will? This would be a disaster for most of the sector, and we will have to deal with a new situation: fewer passengers and rising yields, because we may find ourselves at a point where demand will be much higher than the supply of seats (if they remove one out of every two economy seats, it will go quickly) and it will be time to ask ourselves whether cabins should not be redesigned by taking advantage of this now unusable space to enhance it in the eyes of the customer.

Taking care of customers, today

That’s a good one! Taking care of your clients when you have no more clients… Well, that’s just it! The question is not so much to think about today, the case is already clear, but about tomorrow.

How long will it take them to return? Will they forget you and go to the competition? The paradox of the customer experience is that we are less marked by what goes right than by what goes wrong and is impeccably managed.

There were 35 billion dollars worth of cancelled airline tickets. Once the disappointment is over and they hear that the airlines could not do otherwise, the customer will remember only one thing: how the airlines handled it. And there the policies of the different airlines are very disparate (even if we can see them converging in the long run…precisely for the reasons we mention). Will the customer feel like a hostage? To have a scammed? Or on the contrary that in a difficult context everything has been done, commercially, to offer him the most suitable option: refund, flight postponement, “voucher” with a bonus that can amount to several hundred dollars per flight? Not everyone will expect the same thing and the more flexible and accommodating the airlines are, the more customers will remember. On the other hand, those who are rigid or even disinterested in the client…. (to be tempered with the “local” culture: depending on the country, the customer’s expectations in terms of “care” are radically different). Well done Air France on this one.

What about frequent flyers, loyalty program members? They come by reflex to benefit from the advantages linked to their status and it is a captive clientele or almost, as long as you don’t make a mistake. As expected the highest statuses who are also the best clients were moved by the situation and virtually all hotel and airline loyalty programs have ended up extending the validity of status and miles by one year… Because it is this clientele that will be needed the most to restart and there is no question of losing it by downgrading it by 2 or 3 levels to give it reasons to go to the competition.

This is when the “emotional” capital of customers for airlines and hotels is at stake. They don’t travel but will always remember how they were treated at that time. Especially the best of them.

Showing solidarity

Yes, it’s a question of image, but it counts at a time when marketing is inaudible or even unacceptable. We will not forget the rooms that Accor, Marriott and others make available to people in quarantine or to caregivers.

We will not forget either that if 130,000 French people have returned home it is mainly thanks to Air France and Qatar Airways. The caregivers will remember that Air France gave them comfort kits…both little and so much considering what they live.

We don’t talk about it much today, but tomorrow the passengers will remember it all.

So yes, it won’t solve everything and many players in the sector are facing a thermonuclear winter…and it’s just beginning. But the few things that need to be done must be done well. For the image, for the future, for the passengers who will not forget, for the staff who will be proud of their employer.

Photo : paper plane by KieferPix via Shutterstock