by Bikram Vohra
| All that has blown away with the viral wind and today the question is more of survival of the flying option. Yes, it is that bad despite the cheery notes that people want to strike because hope exists eternally. Still, it needs traction and the issue on the front burner now is can the industry hang in there on an open ended conclusion |
If the Covid pandemic has badly battered any industry, it is aviation. It struck when the graph was rising northwards, and the most significant issue was whether the A380 was dying a premature death. Also, had the 737 Max crisis been suitably resolved and was the Dreamliner’s shims problem acute or easily handled.
All that has blown away with the viral wind, and today the question is more of survival of the flying option. Yes, it is that bad despite the cheery notes that people want to strike because hope exists eternally. Still, it needs traction, and the issue on the front burner now is can the industry hang in there on an open ended conclusion. We can predict 2123 or 2125 as the turning points, but we have no real idea when the public will return to a mindset where catching a flight was the norm.
One of the significant bleeding wounds that will not staunch is the commitment by the top airlines to long-distance nonstop travel and the prodigious investment and aircraft space given to the business class. That is in uncontrolled plummet, and carriers are going to be forced to consider downsizing those luxury cabins.
It might be facile to suggest that between Zoom calls and its equivalents encouraged tangibly by the new reality of working from home, travel by the business and executive community has dwindled. The fact is that the longer this sort of work ethic manifests itself, the less the upload in the premium class.
For a brief, while it was thought that with space being a mandate in the Covid safety protocols, bizzclass might get a boost. It was a spasm and never really took off as a spur.
Add to this scenario the first class being in jeopardy as biz jets and private hiring, fractional or contributory, gain attention and commercial aviation is faced with a huge dilemma? Does it in the comeback mode rework its priorities and return to a 1940s mindset where short-haul and hop flights were of the essence. It took three days to do London to Mumbai. People are no longer prepared to fly for 15 hours, with every country having an arduous but different set of measures to block the virus and its variants. At present, the idea of being stuck in a foreign country is anathema to the once jaunty flying millions, and that might take much longer than imagined to eradicate.
If we were told that a topflight carrier could not get anywhere near a breakeven load for business class on a point to point transcontinental, I would not be surprised. Even if half a dozen scheduled flights at a home base were clubbed together, only a handful of biz class seats would be filled. To hazard a fair estimate between 2019 and now, the drop in business travel could be as high as 65%. This fall in high yield passengers is a deadly blow. It cripples the carrier seeing as how so much had been done to attract the premium traveller. With revenue also down by 50% globally and airlines going belly up by the day, the mega carriers face the harsh truth: they have to downsize and even so, will need a massive heft in co-operation, the sort that would make the togetherness of alliances look like a cold handshake.
This shrinking process is across the board. Aircraft, route maps, fleets, airport slots, catering, engineering, MRO deals all have to be curtailed. This then brings us to another crossroads: how does an airline cut down expenses by half and still maintain its profile. It just will not jell.
The magic word on paper is consolidate. But exactly how that state is reached is still up for grabs. Most of us have been intimidated enough by reality and media myth to distrust airports, airlines and hotels when it comes to keeping us safe from Covid. The command to stay home has been dinned into us over 2020 and directly impacted commercial aviation. Besides, severe restrictions on specific nationalities entering or crossing borders has further slowed down any chance of a comeback. What not so long ago made aviation a poster child for a global village now sees that village splintered and many a destination beyond its remit.
There is another aspect: the fallacy that everyone well-heeled can hire a jet and take off. It doesn’t happen that way. The recent India experience built by media as a great escape is hardly large in numbers nor impacting the bottom line. A surge, like a swallow, does not make a summer.
By that very measure, corporates and the public sector had already reduced travel budgets and hotel nights in the 2018-19 period. So the new normal has only taken that frugality further.
Even before the virus era, airlines around the world were financially in rough weather. From 2019 to today, over 145 carriers have closed down or suspended operations. More are likely to fly into the red.
What is the solution? A gigantic and worldwide campaign to restore confidence. Sounds good but not a hope until passenger restrictions on the grounds of nationality are eased or removed.
Reworking fleets and routes to include shorter flights and maybe even invest in smaller planes. Ironically, the props might be the salvation.
A Bloomberg report says: Travel restrictions have reduced the need for larger jets that can cross oceans. Meanwhile, an uptick of first-time purchasers ventured into private-aircraft ownership at the lower end of the market, which is where they usually start, the bankers said. Leisure trips are driving demand in the pandemic, as more of the world’s wealthy travelers opt for private flights instead of premium seating on jetliners.
Whether this will be a boost for Bombardier and ATR, the only two manufacturers of turboprops is anyone’s guess. Still, the ATR 42 and 72 and the Dash progeny the Q 400 might suddenly find a visibly renewed market interest.
Turboprops in the lighter craft category may be in more demand as people opt for private, less expensive options for the under 120-minute flights to more R and R destinations. Aircraft like the Kingair B200, the Cessna Grand Caravan, the Quest Kodiak, the Beechcraft Super King could well be in demand for small groups who may find it affordable to get away on a little plane with family and friends and avoid crowded airports.
We might also find a peak in sales for smaller jets like the Embraer Phenom, the Challenger 605 from Bombardier, the Gulfstream 150 and the Cessna Citation.
But for the public at large, it is stay home time.
And let’s be honest. No return to the good old days will occur without massive government fiscal band-aids for the carriers. That is the only thermal that will keep them in the air while the engines are off. Globally, the loss has been a staggering $370 billion, and in 2021, the first-quarter projection of recovery has now tanked, and the losses will mount again.
There is bright-eyed talk about bizz travel finding its own once the fear subsides because the Zoom screen cannot supersede the one on one meeting between entities, especially if the competition has fetched up. There is a school of thought that firmly believes such a time will come, but the only problem is that no one knows when the time will be right.
