Airlines: changes of direction on the roadmap to “new normal”
With the tentative relaxation of quarantine restrictions for some countries and more airlines announcing the restart of routes, Matthew Davy, Senior Manager at Monitor Deloitte in London, talked to FINN…
With the tentative relaxation of quarantine restrictions for some countries and more airlines announcing the restart of routes, Matthew Davy, Senior Manager at Monitor Deloitte in London, talked to FINN about the roadmap to the new normal.
Davy helps high profile clients with their growth and transformation strategies and was a panellist at the FIA Connect online session “Roadmap to returning to the skies, the future of air travel.”
Davy said it was likely to be 2024 before the airline industry would see a recovery. While passenger volumes have increased to “healthy levels” in North America, Europe has seen more disruption with the Covid-19 Delta variant of Covid. He said big uncertainties and regional differences were likely to continue in the short term: “Covid will continue to affect the industry for some time, directly through regulatory closures through airlines not being able to try or fly. But also in terms of consumer perception, Will people want to travel? Well, they want to go? how frequently will they want to travel? So it will stay with us for quite some time.”
Business travel – the great unknown
For Davy, one of the biggest unknowns is business travel and how travel policies will be affected by a rise in comfort with streaming technologies such as Zoom. He added this would have a “disproportionate impact on the airlines right because business travel fills up the large planes that go long distances.”
He added travel would look different in the future with a greater focus on passenger convenience and referred to the high point of 2019 as an “outlier.”
Davy explained: “Obviously, there’s a lot of safety procedures going in place, not just in the plane itself, but also the airports and the ecosystem around it, I think we’re going to see more connected travel. So airlines trying to do better at getting people from their homes, to the airports to the planes and then to wherever their destination is.”
New types of business model will emerge
He was optimistic that demand would still be there: “People are resilient, people like travelling, so hopefully, it recovers quicker than we all currently hope.”
Davy predicted that business models for airlines would change away from the premium network. “The consolidation play is essentially scale. It’s a scale game. I think the new, “new normal”, as much as I dislike the phrase, will see different types of business model come to the fore. We’ve seen quite a few failures of airlines, but we see more new launches.”
“If you look at the new launches, they are on specific routes with specific models, and using new airframes. And that’s what’s quite exciting about it all, hopefully, they can put us behind them and move into this new area.”
He added there were still opportunities for growth, noting that the industry had “fantastic brands that people are very connected to.” But he added there would still be consolidation opportunities. “Prior to the crisis, we did expect only five airlines to essentially survive eventually, in Europe, but the big ones will still look at the smaller businesses and see the opportunity to grow. I think we see new routes, new networks, new capabilities enabled by new airframes, but also new business models.”
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