A new way to fly? How COVID-19 accelerated changes in the aviation sector
It’s hard to believe that in December 2019, the aviation sector was looking forward to a record year of air travel in 2020. When COVID-19 crash-landed on the world, the optimistic outlook quickly disappeared. But as Money Mind discovers, there’s optimism in the air.
SINGAPORE: When countries started closing their borders at the start of the COVID-19 pandemic, the aviation sector was one of the first to be hit.
At airports all over the world, rows of idle aircraft parked side by side became a common sight. Experts said the recovery from this unprecedented event could take several years.
According to statistics from the International Air Transport Association (IATA), 2020 was the worst year on record for the aviation industry. It was nothing short of “completely catastrophic”, said IATA regional vice president (APAC) Conrad Clifford.
“US$120 billion dollars of losses globally and that’s about a US$66 loss for every single passenger carrier. We’re estimating cash burn which basically means airlines are sitting on the ground paying for aircraft, paying for staff and unable to generate revenue. So it’s like a loss of up to US$95 billion for this year. And we are not expecting to return to 2019 levels for at least five years.”
Governments around the world, including Singapore, have had to step in and offer the industry financial help to keep it afloat.
But while passenger travel remains in the doldrums, the cargo segment has seen huge spikes.
Mr Campbell Wilson, CEO of Scoot, explains the restructuring of the business model.
“Very early on we took all of the seats out of a few of our aircraft, so we operate full cargo operations. If you’ve received flowers in the last 12 months, possibly they’ve been flown in on a Scoot aircraft from Kunming and other places. We’ve operated thousands of aircraft purely for cargo to maintain the supply lines in the early days to ensure there was a flow of personal protective equipment (PPE) and other vital equipment. And that continues.”
Air cargo is one of the few bright sparks in the industry. It is now back at pre-pandemic levels.
Cargo conversions also gave a boost to another aviation segment – maintenance, repair and overhaul.
“Cargo used to be carried by passenger aircraft in the bellies and when these passenger aircraft do not fly, there is a shortage of cargo capacity," said Mr Jeffery Lam, president of ST Engineering Aerospace.
"So what we’ve done is to expand on our passenger to freighter conversion solutions. We have provided options for customers to convert passenger aircraft to cargo aircraft and hence meet market needs. So interestingly last year, we saw most of the airlines lost money. The airlines that made money were very few and they were the ones who had a significant fleet of cargo aircraft.”
READ: ST Engineering, Temasek to set up joint venture for freighter aircraft leasing
This, however, is a temporary respite, and the MRO sector remains very far from where it was, pre-pandemic, said Mr Lam.
“It’s been extremely challenging from a business perspective - how to manage that huge drop in workload. How to manage the resources you have and then how to look for new solutions for customers. And then how to adopt all that digital technology that’s transforming the world. We have used some of that capacity to invest in technology and development to see how far we can go to support our customers better.”
One thing that industry insiders agree on is that the best way to get borders open again and get passengers in the air is to ensure that people get vaccinated.
They however acknowledge that the vaccination progress will be uneven, and that it could take up to two years to roll out vaccination programmes worldwide.
A combination of vaccination and testing will be required in order to restart international travel effectively, they said.
This is also something Changi Airport Group recognised early on. The company has opened Singapore’s largest vaccination centre at Terminal 4.
Changi Airport Group has also developed several onsite swabbing facilities, with a capacity of up to 10,000 passengers a day.
It is also developing trials for faster ways to test for COVID-19.
Commentary: The aviation sector should bounce back sooner than expected
But even as stakeholders work to find the light at the end of the COVID-19 tunnel, the past year has also transformed the travel experience in ways that will beneficial for the passenger, post-pandemic.
“The way passengers travel will definitely be different," said Mr Damon Wong, vice-president of passenger experience and quality service management at Changi Airport Group.
"One of the things we did earlier on in the COVID journey was to enhance contactless travel ... We will be looking at new ways to enhance these capabilities and to roll it out at new touchpoints across the airport journey.”
READ: COVID-19 grounded thousands of planes. Here’s what happens to them
IATA’s Mr Clifford said that the pandemic has accelerated changes that the industry had been long been pushing for, pre-pandemic.
“We’ve been trying as an industry for 10 years to request for security authorities to move away from paper documentation to digital virtual documentation. And we weren’t really getting anywhere," said Mr Clifford.
"But with the priority of health, even the security authorities don’t really want to be taking a paper document from somebody that might potentially be infectious. So we’ve seen a remarkable turnaround in terms of authorities agreeing to do things digitally.
"That’s been a major benefit because of course it doesn’t just help you in terms of your digital process, it also helps you as you process through the airport in a contactless fashion and that’s what we’ve been aiming towards. So that’s a big change that will stay after the pandemic.
Scoot's Mr Wilson said that one of the lasting legacies of COVID-19 may be a better customer experience.
"In normal times there were many parties involved in the customer journey that were so busy with other things, that didn’t actually talk to each other very well," said Mr Wilson.
"The pandemic has actually focused everyone’s attention on making a smoother and more efficient process. Using modern technology to take people’s biometric information from your passport, match it to the travel information from your itinerary, match it to the visa status or requirements for where they’re travelling to, match it to the testing and vaccination if necessary for COVID-19 - and bring it all together in a seamless way.
"Potentially, someone can go from taxi cab at the drop off point to aircraft seat, without having to show so many documents, or perhaps even any documents, during the process,” he added.
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