In News

challenges for the airline sector

The challenges for the airline sector in the medium and long term are changing dramatically after the coronavirus crisis. Before the declaration of a pandemic, nobody imagined such a prolonged flight suspension scenario worldwide. And although we are in the de-escalation of confinement, the new reality requires airlines to rethink their objectives.

On the one hand, these challenges are focused on the sanitary protocol in airplanes to reduce contagions on flights. But it is also essential to regain the trust of users in order to recover the profitability of the sector. Likewise, it is necessary to reach agreements with public administrations to obtain fiscal aid and incentives. In this way, the operation of the airlines could be partially guaranteed.

Challenges for the airline industry before Covid 19

In reality, the prospects for airlines and aircraft manufacturers prior to the health crisis were modest. At the beginning of 2020, an annual growth of 5.5% and an increase in air traffic of 3.4% were estimated. Consequently, one of the challenges for the aviation market was to renew the fleets of passenger and cargo aircraft.

According to forecasts, it was feasible to renew about 14,200 passenger aircraft out of 38,360 operating today. While in the cargo segment, the forecast was to update 36% of the fleet. Obviously, the suspension of flights to stop the spread of the Covid 19 ruined these plans.

The challenges for the airline sector in the new normal

As we said, the first challenge facing the aviation sector is to ensure that coronavirus health protocols work. Including airport screening tests and aircraft cleaning standards recently established by EASA. In this sense, it is essential to have specialized personnel and the use of appropriate disinfectant products and utensils.

It is pertinent to remember that the aforementioned regulations contemplate the preventive disinfection of aircraft in high-risk areas. It also establishes a special procedure in cases of transfers of passengers with symptoms of coronavirus. Particularly, if there are events such as continuous coughing and fluid expulsion inside the cabin. For this, it is necessary to apply a deep disinfection and even the removal of seat covers and upholstery.

However, for such measures to work, consistency with the protocols applied by the authorities on the ground is essential. Furthermore, it is essential to have communication with the agencies in charge in the countries of origin and destination on the routes. This will allow an assessment of the cohesion between the actions carried out against the Covid 19 by the authorities and the airlines. And at the same time, assess the relevance of complementary procedures.

Restoring passenger confidence among the challenges for the airline sector

One of the main challenges for the airline sector is to rescue the trust of users. Certainly, the image of air transport was affected by being identified as one of the main causes of the spread of the coronavirus. Indeed, the flow of passengers to and from the foci of infection kept the pathogen in transit. For this reason, the stoppage of commercial aeronautical activity was a preventive response as essential as quarantine.

But once the flexibility and the need to return to normality come, we find the reluctance of the users. A recent survey indicates that 47% of passengers will wait one to two months after the de-escalation to fly again. While 27% will do so six months later.

It is here where corporate communication plays a leading role. For this reason, it is essential to invest resources and efforts in institutional marketing strategies to recover the target audience of companies. That is, to convince them about the effectiveness of the sanitary measures implemented by airlines and airport administrations.

Approach the passenger again

Similarly, it is vital to gain passenger understanding of aircraft seating limitations. Specifically, it is important that they understand that this measure allows maintaining the essential social distance in these first changes. Both the challenge and the opportunity lie in the creativity of the content and the strategies aimed at the traveler.

Precisely, the idea is to modify through the message the reactions of fear or annoyance by the temporary conditions of the service. And generate trust, understanding and approach towards the airlines. In this regard, it would be a challenging and timely initiative to achieve joint institutional communication strategies between airlines and official organizations.

Support from the public administration: an opportunity to continue operating

Likewise, recovering solvency and ensuring the permanence of its payrolls are two complicated challenges for the airline sector. Just last May, the losses in the number of passengers was estimated at 500 million. So they stopped receiving around 300,000 million euros in the first half of 2020 alone.

In this context, the government bailout figure emerges as a viable alternative to compensate for losses. For example, leaders of France and the Netherlands set out to solve the liquidity crisis of Air France-KLM. The Dutch Executive has just obtained the approval of the European Commission to dispose 3.4 billion euros for aid. While the EU had already given consent to the French government to use 7,000 million for the same purpose.

In this case, both states each hold 14% of the airline’s shares. But such a reason is not unique to the rescue. The operator KLM is the second largest private employer in the Netherlands and its lack of liquidity threatened the workforce. Consequently, an opportunity to overcome the crisis could be to incorporate the State as a shareholder.

This was the case with Lufthansa, whose shareholders accepted a state rescue of 9,000 million euros. In return, the German state will receive 20% of the airline’s shares.

The case of Spain

However, in Spain, the Government barely has 10,000 million euros to help various strategic sectors. So the credits contributed to operators like Iberia do not seem enough. In this sense, the Spanish companies in the air sector have appealed to their condition as the main driver of tourism. In this way, they hope to obtain greater consideration from the State, including temporary suspension of tax payments.

Undoubtedly, the challenges for the airline sector are very important, but solid foundations are being laid to face this new stage with better prospects. As indicated by Asunción Pérez Esteve, Sales Director of Air France-KLM Delta in Spain, a new stage begins. A stage where one of the main challenges is to regain customer trust and demonstrate once again that “air travel is still the safest public transport”.