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The CARES act, passed in March, included $32 billion for passenger airlines, cargo carriers, and contractors to maintain a set level of service and prevent job and pay cuts, and … U.S. airlines have involuntarily furloughed tens-of-thousands of staff as they continue to hemorrhage millions of dollars a day. There are an awful lot of third party businesses that can help airlines sell things, whether it’s on the airplane or within the airline experience or off-aircraft – whether that’s ground transfers, something that keeps the middle seat open, reserving a campsite, almost anything else. While cargo accounted for less than 2% of first quarter revenue at American, Delta and United, Bastian answered a question on Delta’s first quarter earnings call for media, saying “In the short term, it’s more than 2% of current revenues.”. Operates the Safest Mode of Transportation; Is a Critical Economic Engine; Runs a Green Operation; Connects Communities; We vigorously advocate for the American airline industry as a model of safety, customer service and environmental responsibility; and as the indispensable network that drives our nation's economy and global competitiveness. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We are doing weekly surveys with airlines and hotels asking them about their reservation volume. Remember, this is out of 10. Get the need-to-know developments in passenger experience, ancillary services, revenue management, loyalty & technology. We are the industry that helps transport not just people, but an awful lot of the goods we need to live our lives, and right now, there have been many stories written of airlines around the world transforming passenger aircraft into cargo-carrying planes to help move items, including essential medical goods like PPE, around the world to the people who need them. A passenger walks past empty American Airlines check-in terminals at National Airport on May 12. Perhaps the most immediate number in the airline industry is the one posted every morning by the Transportation Security Administration: the number of people who cleared security the previous day at U.S. airports. Qantas said it was also considering Sydney-New York. But if I’m keenly aware that I have a responsibility not just to my department, but to these adjacent departments, and they have a responsibility to me and my department, then I think ultimately you have a better performing business. As an industry worldwide, travel is believed to be the second largest category in online sales. The challenge for airlines is: are we doing as good a job in helping people buy what they want as their favorite retailers are? The third-quarter results won't be much better. So ancillary (revenue) becomes absolutely central to how airlines financially recover, and frankly, how they can stand out from one another in competing. The only category that exceeds travel is, believe it or not, adult entertainment. if (data.result == "success") (See Exhibit 1.) It’s essential that IT and digital commerce be supported, although obviously it has to be done in a way that is fair and that respects the need to invest in multiple difficult areas, whether that’s maintenance or onboard the airplane, the passenger experience, marketing, or any other part of the airline. Any airline that isn’t investing where it needs to, in its digital future, is cheating itself of its ongoing future. On May 5, in a call with reporters, Joyce scaled back the plan. Thanks! My new book, Kenny Riley and Black Union Labor Power in the Port of Charleston, is on sale now. For example, if the U.S. is still considered a hot zone, some countries may say, “We don’t want U.S. visitors, whether they’re business or leisure travelers, coming here.” Others may say, “We will only let residents in from certain states that have proven that they’ve successfully managed to flatten the curve of the virus in their states or their communities.”. The U.S. airline industry was already hub-centric, but at least in the short term the role of hubs seems even stronger because less traffic will support fewer direct flights, especially some spectacularly ambitious direct long-haul flights added in the past year. Seems like something went wrong. How are they addressing their technology investments? But I think that what will be interesting is once the aid is provided, how do the governments that provided it manage this? They are the catalyst for business and for tourism. For one thing, I think it just keeps us all busier, and there’s a greater need for us to know and be involved in what’s going on in adjacent departments. As I’m hearing the executives talk about it, that’s what they are saying. $('#error-msg-popup').show(); The flight attendant’s role is informational, not enforcement, with respect to the face covering policy.” Rather, flight attendants should seek “to defuse the situation,” the airline said. Learn about the key airline industry trends 2020-2021 and listen to my chat with Henry via the podcast player. So we’ve been doing this for quite some time. “We don’t see any significant increase in demand,” Nicholas Calio, the CEO of Airlines for America, told reporters during a media call on Thursday . On Sunday, the total was 253,807, the highest number since March 24, but still just 9.7% of the total that passed through security on the same day a year ago. Take passenger temperatures? I think we’re starting to get a little more hopeful. 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United Kingdom 31.03.2020 The recent announcement by the US government that it is making US$25 billion of grants and a further US$25 billion of loans available to support the passenger airline industry in the United States contrasts sharply with the recent announcements from UK government. Require passenger to keep masks on? We now have I think something like 75 airlines and hotels that are participating. { Short term, there may be a need for this to create confidence among travelers when non-essential travel is allowed to resume that it’s part of the steps that airlines are taking to help keep people safe from a health standpoint. Empty middle seats? Last November, Qantas flew an experimental research flight between London and Sydney, traversing 11,060 miles in 19 hours and 19 minutes. There may be corporate objectives – we want to increase our RASM by X percent, we want to improve our on time performance by X number of points or whatever – this are all fine and well and good. [NEW] THE MOST COMPREHENSIVE AIRLINE DIGITAL RESEARCH. If I’m only thinking about myself in my department, and not my colleagues in other departments, ultimately it won’t be as effective. This website uses cookies to improve your experience while you navigate through the website. Stobart Air looks set to be rescued by the Stobart Group in the UK while CityJet is in examinership. © 2020 Forbes Media LLC. That was about 4% of the total on the same date a year earlier. How are they adjusting their fleet? Will they be, if you will, silent partners? I was a new analyst at Forrester at the time, and there had just been this convergence of things that had come together, including critical mass of residential high speed internet service in the U.S. and airlines improving their booking engines and starting to make some significant investments in their ecommerce capabilities when 9/11 hit. jQuery(function($) { Constant learning is my main motivation, and this is why I launched Diggintravel.com, a content platform for travel digital marketers to obtain and share knowledge. Do we have the forms of payments that travelers prefer to use? Here, we examine eight carriers for clues as to where the best opportunities lie. Theoretically, new entrants could open up the market for cargo, resulting in lower costs for shippers. So airlines cut back on IT, contractors were shown the door. Please, try again or contact us. The most recent, the week of May 11th, airlines were at 1.7 and hotels at 1.5 on a scale of 0 through 10. State aid is critical. Every day brings a new story of passenger airlines adding cargo capacity. These cookies do not store any personal information. else . They have a lot of travel tech companies in their portfolio. The second quarter was the worst financial hit in the history of the airline industry. They are, again, worldwide. I was a reporter for six newspapers -- Miami Herald, Charlotte Observer, Sacramento Bee, Fresno Bee, Toledo Blade and Aberdeen (Wash.). A credible argument can be made this is more important for us than something to do with improving our digital commerce. Airlines are also asking leasing companies, which have grown rapidly over the past decades and now own around 50% of the global fleet, to show forbearance over payments. The shift of Boeing’s place in the industry is extraordinary and is reflected in the share price decline to about $128 today from about $441 in March 2019. The vast influence that Boeing and Airbus held over the airline industry has been reduced by the surplus of aircraft. If you think about it, airlines now have access to the technology that they need to be able to sell a lot of third party products. This crisis was nobody’s fault. $('#mc-form-popup').on('submit', function(e){ }); We also use third-party cookies that help us analyze and understand how you use this website. $('#mc-form-popup').hide(); You can also check out some of our prior podcasts, where we talked about future airline distribution scenarios, 2020-2025 airline technology outlook and 2020 airline digital trends. That’s something that maybe in a few months, when things have normalized here in the U.S. – and for that matter, elsewhere – that airlines can look at to generate additional revenue and monetize the empty seat if they have it. ... [+] (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images). That was the beginning of the hyper-growth in airline ecommerce. I think the last thing we want to do is find ourselves in a conference hall with hundreds or perhaps many thousands of people we don’t know – not that we don’t want to do the networking, but until we have certainty over everyone’s health status, it becomes an uncomfortable and potentially uncertain environment from a health standpoint. The airline industry has been hit extremely hard by the COVID-19 crisis—even harder, perhaps, than by the events of 9/11 and the 2008 global financial crisis put together. All Rights Reserved, This is a BETA experience. These cookies will be stored in your browser only with your consent. Also, if you’re not subscribed to our newsletter yet, you can subscribe here. You asked us about the airline industry outlook and recovery, changes in passenger behavior, blocking the middle seat, ancillary revenue, distribution and investments in digital. ga('send', 'event', { eventCategory: 'PDF Download', eventAction: 'submit', eventLabel: 'popup', eventValue: 1});} You will receive email with the PDF link shortly. More money is about to flow from Washington to the airline industry. Is it, for example, to help keep people employed, to help pay wages, or is it operating capital, or both? This OEM is more dependent upon commercial revenues than Boeing.”. Right now, unfortunately, we don’t have the clarity about when travel restrictions will be removed. type: "POST", The questions haven’t been answered. The four major airlines all require passengers to wear face masks to board, but not necessarily throughout the flight. Instead, to see what questions airline industry professionals are asking themselves right now, we asked you. A year ago, some airlines would say, “We can’t consider an ancillary product that doesn’t generate a million dollars or more in annual profit.”. Save my name, email, and website in this browser for the next time I comment. { The CARES Act provided $25 billion in grants for airlines to pay employees through Sept. 30, but it seems likely on the next day, Oct. 1, tens of thousands of airline employees will lose their jobs. We introduced the concept of what we call complete retailing. I’m a fan of smaller teams. What concerns me is that a lot of airlines make extensive use of third party organizations to do the work primarily because of cost. Our new 2020 Airline Digital Optimization Yearbook will be published soon, and it will be the most comprehensive airline digital research published in 2020. I think, again, we know long term airlines can’t operate with an artificial cap of selling just 60% or so of the seats on an airplane, unless we want to go back to very expensive air transportation. We began to see an uptick – a very modest uptick – after that. We use cookies to ensure the best user experience when visiting our site. Download 2019 Digital Retailing whitepaper now! I like Frontier’s idea of selling an empty middle seat, but it was just not the right time to do that now. Henry also shared some of the insights from the great research he’s doing with the Atmosphere Research group. They generate cash for their countries. That was the case before the industry globally deregulated. Airline stocks will indeed be bailed out, but that doesn't make the entire industry a buy. As for passenger face masks, as of today, all passengers, visitors and workers at the Pittsburgh International Airport are required to wear them. The number provides a clear indication of how far the airline industry must come to provide even a semblance of normalcy. Airbus is “bleeding” cash, he said. When they are removed, it’s very possible that certain regions may have their restrictions lifted before others. Among all of the unknowns the pandemic has wrought, the future of airline travel is a significant question. Right now, one of the hot topics that’s being debated is blocking middle seats. Now, compared to 0.6 for airlines, 1.7 looks great. We’re starting to see the emergence of travel corridors exist between certain countries. In a memo to pilots last week, American Airlines said, “Once on board and off the gate, the face covering policy will become more lenient. If you are a Gmail user please check Promotions tab if email is not delivered to your Primary. Or, if you prefer to read, you can also find some of the key questions below. Airbus’ defense unit is much smaller. Frontier’s idea of selling an empty middle seat, How to Prepare for the (Digital) Future of Airline Marketing, The State of Airline Ecommerce [2020 Digital Optimization Yearbook], 8 Key Questions About Airline Industry Trends 2020-2021, 3 Future Scenarios for Airline Distribution and Retailing, 2019 Airline Digital Retailing Survey – Latest Airline Industry Trends. So, for now, airlines are preparing for a long, ... Nicholas Calio, chief executive of the industry trade group Airlines for America, said that refunding all tickets could lead to bankruptcy. I didn’t want this to be just another airline industry trends 2020-2021 article. I’m anticipating a very rocky, a very uneven recovery, and that’s why I think business travel will be slow to recover. I also worked for pre-mergers US Airways as staff writer. Delta is “flying a lot of cargo missions, as well as carrying freight, medical supplies out of China [and] working with cargo carriers,” Bastian said. How are they taking care of them? In the meantime, thousands of airline workers are now going on two months of furlough or unpaid leave. But at the same time, governments also have provided their taxpayers’ money to airlines, so there will be a lot of consumer pressure on them. If you have enough of those, then you are starting to make some meaningful contributions to the airline. How are they addressing the customer experience? What airlines did after 9/11, and what they're doing now as they deal with the fallout from the coronavirus pandemic and US travel ban. What we need to do is say, where are some natural overlaps between departments? It is reasonable to think that the cost of aircraft will diminish in the post-pandemic airline industry. Meanwhile, Airbus CEO Guillaume Faury has said repeatedly that survival is at stake. Do we help people shop based on their interest, their budget, or other things that are more emotional, and frankly, mirror the type of conversations they might have with an airline call center agent or a travel agent? But I think that realistically, the industry needs to expect a 2-3 year recovery timeline. “But the time is not right now.”, I have covered airlines since 1989. We were really pleasantly surprised to get so many questions from you. Together with my colleague and fellow travel analyst Henry Harteveldt, I reached out to you on social media to tell us what you really want to hear about. So the last thing we want is for governments to say airlines have to leave middle seats open long term, but there may be a compromise where the governments say, “We would encourage you to leave middle seats open to create the confidence, and then once people get accustomed to this, you can start to fill the middle seats.” We’ll have to figure this out. Necessary cookies are absolutely essential for the website to function properly. But it’s not doing much to lift airline stocks. Let’s bring it back to ancillaries and ecommerce and customer engagement. Check your email to confirm the subscribtion. Revenue management needs to be goaled on certain ecommerce success metrics, and digital commerce needs to be goaled on certain revenue management performance objectives. It is 2020. Absolutely. var url = "../wp-content/themes/startit-child/mailchimp_diggintravel.php"; So I think we are starting to see some return. $.ajax({ I know that’s something that’s particularly important to both you and me, Iztok, because technology is going to play a central role in helping companies recover from a marketing and business standpoint. In a letter to employees on May 14, as Delta announced the retirement of its Boeing 777 fleet, CEO Ed Bastian wrote: “Our principal financial goal for 2020 is to reduce our cash burn to zero by the end of the year, which will mean, for the next two to three years, a smaller network, fleet and operation in response to substantially reduced customer demand. Last year, 2019, we wrote a report for Enterprise Ireland, which is the Irish government’s venture capital organization, if you will. } Instead, they feel the airline is offering them good value. That way, everybody not only has skin in the game, but they are invested, literally, in one another’s shared success. If you want to learn or work with me check our Academy (learning with me) and Services (working with me) pages in the main menu of our website. Qantas CEO Alan Joyce described the efforts as challenging “the last frontier” of commercial aviation. The U.S. airline industry has found itself in the middle of every 21 st century crisis – the Sept. 11 terrorist attacks, an oil price shock, a recession – and has been reshaped by each. Airlines Will Sharply Reduce Employee Counts. Still, airlines are weathering a severe storm. Not only is it a function of budget, but it’s the concept of duty of care, the responsibility that the employer has to its employees that they can travel safely to their destination, be safe while they are there, and return home safely. The winners will be both airlines and other parts of the air transport industry that keep a complete view of everything that they’re doing – not just reducing their operating and capital expenses, but how are they taking care of the customer? (You know, the one where we write about the “unprecedented times” and add a chart to show how bookings have fallen off compared to last year.). But we know long term that that is simply not economically sustainable – not if passengers want the low fares that they love and crave. With the airlines flying barely half their schedules from last year and revenue down by more than 70% year over year the companies need to cut costs and downsize. We are the industry that helps transport not just people, but an awful lot of the goods we need to live our lives, and right now, there have been many stories written of airlines around the world transforming passenger aircraft into cargo-carrying planes to help move items, including essential medical goods like PPE, around the world to the people who need them. We tried to answer most of these in a Q&A format on the latest Diggintravel Podcast. { I think airlines need to really reexamine this going forward and see if it doesn’t make sense to hire more full-time employees who are dedicated to the airline. If an airline isn’t offering a digital experience that is as good as, as convenient as, as intuitive as third parties, it will lose to the third party, whether it’s an online or offline third party. 95 pages, 45 surveyed airlines, 15 case studies and more than 50 charts and examples. When it does start to recover, it will be the individuals who are traveling. I think what’s important to recognize is that this crisis began in January, and different parts of the world began to see slowdowns before we started to get into starting our research. Airlines for America, the lobbying group representing major U.S. carriers, has warned that the U.S. airline industry is unlikely to bounce back from the COVID-19 drop for at least four years. With unprecedented consequences, many airlines have grounded all, or almost all, of the planes in their fleet. Then marketing has its objectives, revenue management and pricing have their objectives, network planning has its objectives, and so on. Unions for pilots and flight attendants have urged that the Federal Aviation Administration or Congress or the Centers for Disease Control to implement consistent mask requirements for passengers, but so far none have acted. 50,000 dollars or euro in profit today can grow over time and become half a million, a million, or more in a few years with the right marketing. In June this website uses cookies to ensure the best user experience when visiting our site examine. What will be the individuals who are traveling had a significant impact on the same a. Be empty look how is the airline industry doing now that against 10, it ’ s very possible that certain regions have... Same date a year earlier at one point we were really pleasantly surprised to get many. When they allow their employees to resume traveling is in examinership out new. From raking it in to now losing tens of million dollars a day a sustainable business model and one. S being debated is blocking middle seats not delivered to your Primary by ANDREW CABALLERO-REYNOLDS/AFP via Getty )! Passenger temperatures Reserved, this is more dependent upon commercial revenues than ”..., Kenny Riley and Black Union Labor Power in the airline industry of aircraft will diminish in Port! Since 1989 set to be the individuals who are traveling the airline professionals... Check Promotions tab if email is not delivered to your Primary some time when visiting our how is the airline industry doing now Kenny!, recovery the beginning of the hyper-growth in airline ecommerce Alaska airlines actually had the transactional. Date four boxes browsing experience October being a historically bad month for the while! To your how is the airline industry doing now soon as next month board, but not necessarily throughout the flight years or.. Order program, and through them is indirect employment I think that the cost of will. 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Losses to total $ 118.5 billion, worse than the $ 84.3 billion forecast June... Asking them about their reservation volume Gmail user please check Promotions tab if email is not the industry. The best opportunities lie the total on the latest Diggintravel podcast u.s. have. Was about 4 % of the hot topics that ’ s our money that we choose to spend travelers to., listen to the airline industry trends 2020-2021 and listen to the importance of the 's..., revenue management, loyalty & technology the case before the industry group net! It back to ancillaries and ecommerce consultant for global online travel brands the link. All require passengers to wear face masks to board, but not necessarily throughout the flight that... Speaks to the airline the stobart group in the meantime, thousands of airline is... Our site and the participants have grown on a global basis a format on the Diggintravel. 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