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Aviation will soar high again

OPINION
By Chris Diaz | September 13th 2021

Cargo is expected to remain a strong business for airlines with Capacity Ton-Kilometres (CTKs) projected to grow by 13.1 per cent. [Archive, Standard]

Aviation is among the few delicate sectors that folded first and are likely to be among the last sectors of the economy to emerge from the Covid-19 induced coma.

For more than 12 months now, aviation has faltered upon great turbulence that has been characterised largely by images of parked aircraft on runways and empty check-in (and check out lobbies) at airports.

Despite the catastrophe, the sector is poised to come back to life by building back better, just like any other part of the economic pie.

According to an April report by the International Air Transport Association (IATA), airlines across the world posted net losses of 126.4 billion dollars last year on the back of the greatest depression for the industry in modern history.

Tougher year

But before the industry sees the light at the end of the tunnel, aviation will still have to overcome one last big hurdle- the persistent uncertainty from the global health crisis.

According to IATA, the financial performance of airlines will still be worse in 2021 as the world grapples with controlling virus variants and slow vaccinations.

Airlines are still expected to record net post-tax losses of 47.7 billion dollars with operating margins of up to a negative 9.4 per cent.

The United States and Europe are expected to see better prospects in the year to December while carriers in the rest of the world will see a greater hit from weaker international travel.

2021 has seen a weaker start to the passenger business as travel restrictions re-emerge amidst a surge in Covid-19 infections.

Global Revenue Passenger Miles (RPK) is nevertheless projected to recover to 26 per cent at the end of 2021 from a negative 51 per cent in 2021. Cargo turnover and volumes continue to grow and show positive future trends.

Cargo is expected to remain a strong business for airlines with Capacity Ton-Kilometres (CTKs) projected to grow by 13.1 per cent.

Cargo revenues are projected to hit 152 billion dollars or a near equivalent of one-third of the industry’s total revenues.

However, costs are expected to remain a challenge with airlines projected to burn through more cash on the overheads.

Create and innovate

The future of aviation is expected to ultimately start from where it stopped- with the pandemic coming under tighter controls.

A pick-up in air travel is expected from greater vaccination rates and the loosening of travel restrictions. Vaccination rates are however still low from an imbalance in the distribution of jabs across the world.

Baby steps for the aviation sector will commence from operations around the uncertain pandemic.

For instance, airlines must increase their flexibility to instil confidence in booking by customers.

This may include flexible changing and cancellation fees including consideration for full cash refunds for passengers who change their mind on travelling - touches customer experience is the way forward.

On the same note, airlines must consider relaying real-time information to passengers including flight cancellations, changing travel requirements and health and safety protocols.

Automation will also be critical to keeping the pandemic at bay and should cover aspects such as contactless payments, check-ins, inflight services and screening which has been seen by major airlines and customers and governments, rules and demands safety measures at all airlines and airports.

Last year, Etihad Airways became the first airline to run a trial on new-contactless self-service technologies.

Others to pilot similar initiatives have included AirAsia, the Bangalore International Airport Limited, Avalon Airport, America Airlines, Japan Airlines, Emirates, Qatar airlines and Avinor.

On electric aircraft, the future holds a lot…. there have been test runs and the investment happening around this area are interesting – at the smaller end of the market, things are looking more optimistic as technology improvements increase comfort and range of electrical flying.

Digitisation

The next frontier for aviation long after a potential recovery from the pandemic will be digitisation.

Big Data and artificial intelligence (AI) will set the pace for greater automation in the industry. Elements such as biometrics and face recognition will for instance allow for the touchless and seamless provision of services to customers.

According to a survey by NewVantage Partners, strategic advisors in big data, 97.2 per cent of aviators have been working towards deploying big data and AI.

Juxtaposed with digitisation will be training- upskilling and reskilling staff in the industry to make way for the industry’s digital transformation as new processes and issues emerge.

At the same time, airlines must look into new business lines such as e-commerce, the delivery of online sales, retail and partnerships.

National carrier Kenya Airways (KQ) is for instance considering new partnerships and collaborations as alternatives to the proposed nationalisation process which is maybe, and currently under the consideration of the National Assembly.

Several airlines have created innovation hubs that are termed as centres of innovation and a springboard for new ideas and data-driven innovations.

These agreements or MoU, further lay the foundation for the co-creation of concepts and procedures to safety scale electric vertical aircraft (EVA) flying cars soon.

Airspace liberalisation

In a recent rant, tourism leaders including ministers of various nations lamented expensive intra-Africa air travel where it is cheaper to fly overseas than in most parts of the continent.

Barriers including high fees, bureaucracy, and lack of cooperation and Visa restrictions have made intra-Africa air travel a nightmare.

Countries in the region must consider liberalising their airspaces as carriers take to the air again. 

The basis for the open skies lies in the Single African Air Transport Market which seeks out a single unified air transport market in Africa to advance the liberalisation of civil aviation in Africa.

Today, only 34 of the 55 African States have signed up to the treaty with notable absentees being our neighbours Uganda and Tanzania.

The slow implementation of the open skies treaty is shockingly against the impact it would mean on jobs and the economy.

A survey by IATA for instance shows if only 12 countries took up the initiative, this would result in the creation of over 155,000 jobs and an additional 1.3 billion dollars to the countries annual gross domestic products (GDP).

The future of aviation, new employment and being the facilitation of investments and tourism needs more private and public international partnerships to open the skies for greater people and cargo growth. Safety remains most important at all times.

Chris Diaz - Business leader and Brand Africa Trustee

Covid 19 Time Series

 

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