Post-COVID-19 era for aviation
The impact of COVID-19 on aviation and tourism industries was very rapid and heavy in a way we have never seen before. Travel bans and flight cancellations in response to the outbreak resulted in an unprecedented deep and long-lasting drop in passenger traffic and almost total absence of air connectivity. This led to a fall in revenues for airlines, airports, agents, ground handling companies, hotels and others in the chain of suppliers and businesses depending on aviation or passenger traffic. It’s hard to give any predictions on how aviation will cope with this and when it will be back to normal but here are some thoughts on the post-COVID-19 era.
Low capacity and connectivity
Not all routes that are closed due to the COVID-19 outbreak will be renewed any time soon. This is especially topical for Ukraine. The airline and travel industry will face bankruptcies, reduction of fleets, staff cuts, unprofitable subsidiaries and routes and trends like luxury offerings may be forced to close. This will result in a fall in connectivity, especially at regional airports, consolidation and probably lots of cases of state assistance, including nationalization of some local carriers.
Passengers will have to be concentrated to ensure sufficient aircraft load, so the role of hubs will be important. Small airports will see a fall in traffic or should attract low-cost carriers with fruitful conditions for them. Carriers like Ryanair or Wizz Air already demonstrate awareness and are ready to attack traditional airlines on price and this could well change the situation for passengers and regional airports for the better. This crisis seems to be a very good opportunity for low-cost carriers.
One may look at consolidation in USA which even before this crisis had only four big airlines: American Airlines, United, Delta (traditional airlines) which has around 50% of the domestic and international and Southwest Airlines (low-cost model) with up to 15% of the market. This is neither good nor bad, but it makes it harder for small airlines to survive. Now such consolidation processes which took decades in the USA may move ahead much faster in the EU and other regions.
All those processes mean that passengers should not expect cheaper tickets and a variety of offers for the first few years once all the flight bans have been overturned. Long-haul flights will be reduced and giant aircraft will be used less.
Ukrainian airlines that either had problems before the restrictions came into effect or were dependent on tourism traffic, will struggle to survive and must change their models of business significantly as well as flight plans and network of routes.
Low demand and new forms of passenger behavior
Will passengers go back to their old practices? What will new forms of travel behavior be, and how will airlines adopt? And will states change their visa-free policies and what new rules of border crossing will be implemented?
Passenger loyalty and brand power may come under question as many tickets were not refunded. People are spending time in confinement and got even more used to online and other habits. Or perhaps people will be hungry for travel after quarantine measures. It’s hard to predict what the balance of new habits will be.
Airlines will need of a massive cash injection and will develop new terms and conditions of cooperation with agents and distribution channels. While earlier we saw attempts to build direct sales and decrease the role of the Global distribution system, luxury services and comfort-based offers, and those trends may well stop now. Online sales instruments and development of channels will accelerate as will certain other processes to speed up the cash flow.
Security and healthcare measures will be stepped up. Temperature readings or rapid pre-boarding test for the presence of the viral load in blood may become a common rule, at least until vaccination comes into effect. This may lead to changes in demand for onboard equipment, new check-in procedures and specific insurance may arise, etc. States may impose new border crossing rules and passengers will have to adapt.
As an example, Etihad Airways will carry out a trial of new contactless technology that will help it identify passengers with medical conditions, potentially even those with early stages of the coronavirus. The technology can “monitor the temperature, heart rate and respiratory rate of any person using an airport touchpoint”, which includes check-in, immigration, or bag drop. If a passenger show signs of illness, the system will automatically suspend check-in or bag drop. “It will then divert to a teleconference or alert qualified staff on site, who can make further assessments and manage travelers as appropriate”, Etihad adds.
While in EU states people and businesses are receiving some assistance from the state and had some kind of budget for travel, this money will now be needed elsewhere. Ukrainians are not receiving help, have lost their opportunities to earn income and are merely spending what they had in reserve. It may take years for demand for travel to return to their previous levels.
Change in legal framework
The entire international legal framework for aviation, which is based on the 1947 Chicago Convention on International Civil Aviation, aims to ensure that aircrafts should fly. Article 22 of the Chicago Convention establishes that States should normally prevent unnecessary delays to aircraft, crews, passengers and cargo. Thus, any implementation of restrictive measures should be necessarily based on a clear assessment of risk. At the same time, any such measures should be effective in line with the Chicago Convention and ICAO Assembly Resolution A35-12. The International Civil Aviation Organization requires that “Contracting States shall not prevent an aircraft from calling at any international airport for public health reasons” unless such action is taken in accordance with the International Health Regulations (2005) of the World Health Organization.
But all events, bans and restrictions were so quick that governments simply didn’t care to follow all the demands and guidelines of the aviation legal framework. For a time there were even no clear NOTAMS, aka notices to airmen, for some time, and no legal certainty on what would be coming. It is unclear as to what risk assessment was done and what measures taken to help the aviation sector to survive.
A National Aviation Plan that references planning for an outbreak of communicable diseases must be in place. It should follow the guidance provided by the ICAO and readiness guidance available from the WHO. A National Air Transport Facilitation Programme or similar body must also be in place, which clarifies the roles and responsibilities of all relevant government agencies and ministries and other stakeholders for preventing the spread of disease, as per ICAO Doc10042 Model National Air Transport Facilitation Programme.
All that ICAO guidance did not, in actual fact, work. There was no preparation for such a crisis and many decisions were taken without such coordination and proper risk assessment. This needs to change; and the ICAO should encourage states to care more about respective procedures and changes to legislation.
Some well-established rules will also change. There are calls for the global suspension of the 80% slots usage requirement. The 80/20 rule allows a carrier to continue using the same slot in the next scheduling period if it has used that allocated slot for at least 80 per cent in the previous period. But any such changes need thorough analysis, as suspension of the 80/20 rule would make traffic recovery harder for many regions.
By Andriy Guck, managing partner of Ante Law Firm