You might also like:
To counter massive declines in air traffic, some airlines are announcing more operational and network changes in a month than they typically would in a year.
But are these temporary modifications to address an acute — but passing — crisis, or are these long-lasting, secular changes? Are they pivots to address contemporary concerns and conditions, or do they reflect a revolution in how carriers plan and operate?
On the issue of whether the crisis will ultimately be transformative versus just a major bump in the road, the answer may depend on the type of airline in question.
“We view this particular environment as more of a speed bump than a paradigm shift, mostly because we carry leisure traffic,” Spirit CEO Ted Christie said on stage last week at the International Aviation Forecast Summit (IAFS) in Cincinnati. “The size and width of this bump is still to be determined.”
But in an interview from the conference, American Airlines head of global sales and distribution Alison Taylor said the crisis has already been transformative for her employer.
“We have taken this opportunity to transform how quickly we can activate solutions for our customers, and I don’t think we’ll ever go back,” Taylor said.
As the pandemic has played out, airlines of all types have been forced to make adjustments of sorts. Some are near-universal in application, such as stepped-up cleaning protocols. Others, that cross both low-cost and full-service sectors, have fast-tracked deployments of touchless technologies, especially at check-in, including baggage check.
Neither analysts nor the airlines expect those developments to reverse once the pandemic is in the rearview.
“The cleaning they do is just going to stay,” Ben Baldanza, a former Spirit CEO who now co-hosts the industry podcast Airlines Confidential, said during a live podcast recording on the IAFS stage.
But when it comes to operational strategy, the pandemic might lead to a paradigm shift for the biggest carriers, while having less impact on the ultralow-cost carrier (ULCC) sector.
Already, the pandemic has caused Big Three U.S. carriers American, Delta and United as well as Alaska and Hawaiian to eliminate most change fees long-term. Meanwhile, ULCCs Spirit, Frontier and Allegiant, with their hyperfocus on ancillary revenue, have announced no such plans.
But as Christie alluded, it’s the relative strength of the domestic leisure market versus other customer segments that is forcing strategic changes by the large carriers that ULCCs don’t see a need to make.
According to ARC, corporate travelers accounted for 29.6% of agent channel transactions in 2019, while online sales accounted for 42.3% of transactions, and leisure sales accounted for 28.1%. All of the segments are way down this year, of course. But for the week ending Oct. 11, corporate transactions remained down 85.7%, compared with declines of 49.8% for online transactions and 69.7% for leisure agency transactions.
With leisure travel, especially among people visiting family and friends, recovering faster than business travel, Frontier, like Spirit, isn’t making dramatic changes to its network, senior vice president of commercial Daniel Shurz said.
“I think we are going to have to make relatively fewer adjustments,” he said. The pandemic, he added, is “a very large speed bump for ULCCs, but it’s a speed bump.”
Conversely, Southwest chief commercial officer Andrew Watterson used the IAFS conference to announce that the carrier will begin serving Chicago O’Hare and Houston Bush in the first half of next year. It’s part of a strategy by Southwest to broaden its network during the Covid-19 pandemic in search of new revenue opportunities while it simultaneously reduces frequencies on numerous routes that it has been flying multiple times per day.
“We will continue during the Covid times looking for network breadth to redeploy our people and our aircraft and for new sources of revenue, because ultimately the way out of this is through more flying and more revenue,” Watterson said.
United had previously announced strategic network initiatives aimed at chasing leisure demand, including flying 17 routes in the early winter to Florida from non-hub airports and upcoming launches of three routes to Africa that are focused squarely on serving diaspora populations visiting family.
Speaking at the IAFS event, Ankit Gupta, United’s vice president of domestic planning, said his team is trying a variety of tactics to navigate through the crisis. Most initiatives have worked, though not all.
“Fail fast if you have to fail,” he said of his team’s new philosophy.
Meanwhile, Delta senior vice president of network planning Joe Esposito raised the possibility that the sudden shift toward remote working caused by the pandemic could change some traffic patterns long-term. He noted that New York is currently only at 20% to 25% of 2019 numbers, while Delta’s mountain hub in Salt Lake City is at 90%. Similarly, small southern stations such a Valdosta, Ga., and Golden Triangle Regional Airport in Northeast Mississippi are overperformers.
Delta, he said, will be carefully watching how populations and travel shifts.
“New York may never come back as much as we’d like, but where are those people now?” Esposito said.
Taylor said the pandemic has forced American to make changes that go beyond its network. The carrier, she said, has become nimbler at implementing technical solutions, including touchless baggage check and a new tool that lets agents override fare rules within the GDS.
She also called attention to arrangements the carrier has made with Caribbean nations for rapid testing to replace mandatory quarantines.
“We believe we have become more innovative, quicker, and we have been able to pivot during this time. And that won’t go away.”
Source: travelweekly.com