SINGAPORE (April 17): The Sept 11, 2001 terrorist attacks (9/11) on the World Trade Center (WTC) in Manhattan, New York, changed not just the face of US foreign policy for good — it also altered the course of the global aviation industry in a dramatic and permanent fashion.
For example, boarding and disembarking from the plane used to be as quick as getting in and out of a convenience store. But various security screenings have lengthened that process. Items that were once easily stowed in cabin luggage have now been limited by quantity, or forced to be checked in or banned altogether.
Moreover, access to the cockpit has been restricted and fortified to prevent any forced entry. This is on top of travellers having to complete tedious visa applications and face unwarranted queries by immigration authorities. In short, air travel has become a painful and cumbersome experience like never before.
Today, the aviation industry could again face a similar upheaval — for better or worse. But this time, it will not arise from the traditional threat of terrorism. Instead, such sweeping changes, if any, will stem from the threat of a microscopic nature.
The spread of the novel coronavirus (Covid-19) pandemic has claimed thousands of lives and infected hundreds of thousands more across the globe. It has also crippled many industries, disrupted global supply chains and threatened the jobs of many people.
Air travel has undoubtedly played a major role in enabling Covid-19 to spread like wildfire. From Wuhan, China, where the first case was said to have originated, Covid-19 has now plagued nearly 200 countries. In a bid to slow — or better yet, halt — its spread, many countries have gone into lockdown and closed their borders, permitting entry only to returning citizens.
As a result, many airlines have cut capacity and grounded most of their fleet. These include Singapore Airlines, Qantas, Air New Zealand, AirAsia, Ryanair, and Lufthansa, among others. Over 20 million scheduled seats have been wiped out in the past seven days to March 30, according to OAG Aviation Worldwide. It was the single largest cut in capacity in percentage terms at the global level, the air travel data provider notes.
Passenger traffic at airports are also similarly affected, though the fuller impact has yet to be reflected in the figures. The Airports Council International, which collects statistics from airports around the world, has data only up to January.
To keep afloat, some airlines are repurposing their passenger planes to transport cargo. For instance, Delta Air Lines and Air New Zealand said they would offer cargo charter services on their passenger planes. Cathay Pacific Airways, Korean Air Lines, American Airlines and United Airlines are also offering such services.
Mergers and acquisitions could also be on the cards. Market observers are speculating that Malaysia Airlines (MAS) and AirAsia could merge if the situation worsens. Other airlines, unfortunately, have bitten the dust such as British airline Flybe, which ran out of cash and entered administration in early March.
When the dust eventually settles, the way the aviation industry functions may no longer be the same. This may have lasting implications for air travel — similar to what had happened after 9/11.
Mixed views
James Walton, transportation, hospitality and services sector leader at Deloitte Southeast Asia, says airports could likely increase hygiene measures and disinfection routines. He also raises the possibility of airports continuing temperature screening of arriving travellers on an ongoing basis. “This could result in longer turnaround times for flights and increased costs,” he tells The Edge Singapore.
Space utilisation at airports could also change going forward. In particular, areas within the airport may have to be reconfigured to reduce the level of maximum capacity. This is to avoid the clustering of large groups of people in small areas and improve social distancing. “Such areas could include, but are not limited to, waiting and transit lounges, smoking corners and restaurants,” says Walton.
Meanwhile, air routes could be redrawn. Walton says airlines may consider reducing their dependency on one layover destination or having too many flights to a particular destination. This, in turn, will impact the hub-and-spoke system and jeopardise the status of existing aviation hubs. Businesses and people relying on the growth of aviation hubs to survive will be affected, he says.
Still, not everyone is convinced that all or some of these changes will be realised. Lim Boon Chai, managing partner at aviation consultancy To70 Singapore, notes that Covid-19 is not the first public health crisis to hit the aviation industry. SARS, MERS and H1N1 had preceded the current pandemic, though their impact was regional rather than global.
However, the measures put in place in response to these health crises, such as temperature screening, were temporary. In contrast, the type of occurrences that galvanise lasting changes to the aviation industry historically tends to be those with a direct impact on the safety of flight, he says.
For instance, 9/11 introduced changes to aircraft design and imposed restrictions on items that could be brought onboard, he says. The downing of MAS flight MH17 over Ukrainian airspace changed how aviation authorities and airlines respond to flying through airspace in conflict zones, he adds. And the mysterious disappearance of MAS flight MH370 is changing how aircraft will be tracked.
Covid-19, on the other hand, does not affect flight safety. Instead, its impact is felt in the financial viability of airlines, airports and aviation-related businesses, he says. Covid-19 has forced them to rethink how they can survive these financial shocks, adds Lim, which is not any different from other crises prior to the pandemic.
“For those reasons, we are more inclined to take a view that Covid-19 would not introduce any change to the industry that would be either uniquely applicable to aviation, or was not already driving change in the industry,” Lim says.
Pre-pandemic trends to continue
One trend that may be accelerated by the pandemic is the decreasing reliance on labour, although it may not be driven by Covid-19 per se. Lim points out that prior to the outbreak, there have already been shifts towards adopting more technology for airport processes, such as check-in, bag drops and security clearances. “In Changi Airport Terminal 4, you can practically go from check-in to boarding the aircraft without needing to come into contact with any ground service personnel,” he says.
That said, an airplane’s crew will not have to worry about losing their jobs. Joshua Ng, engagement manager at Alton Aviation Consultancy, notes that there is a minimum number of flight crew per aircraft as required by civil aviation regulators. “This is to ensure that in an emergency evaluation, sufficient crew members are on hand to assist in the evacuation and safety of passengers,” he tells The Edge Singapore.
The trend towards smaller aircrafts will also continue. Again, this is not driven by Covid-19 per se, but by fuel efficiency, though the pandemic may accelerate it. Andreas Jahnke, managing director and head of markets in Europe and Asia Pacific at Lufthansa Consulting, says airlines are in favour of more efficient twin-engine long-haul aircraft. This includes the Airbus A350, Boeing 787 and Airbus A321XLR. “More and more airlines are retiring their large aircraft,” he tells The Edge Singapore.
Similarly, social distancing will not reverse the trend of maximising the number of installed seats in a plane or capacity. Ng says airlines will continue to fill up as many seats as they can on each flight to attain high load factor and lower unit seat costs, to maximise profitability.
According to him, the cost of retrofitting an aircraft is an expensive exercise. On one end, the retrofitting of SilkAir’s Boeing 737 MAX-8s with lie-flat business class seats — in preparation of its merger with SIA — will cost US$4 million ($48 million) an aircraft. On the other end, SwissAir’s cabin refurbishment of its Airbus A340 aircraft is estimated to be US$20 million an aircraft, he notes.
Lim of To70 Singapore shares a similar view. “We do not think Covid-19 will cause a fundamental change in the determining the separation between seats for the purpose of social distancing,” he says. “Flights have to carry certain loads to be financially viable and seat configurations are difficult to change. The disease will eventually come under control and cease to be a public health crisis.”
Ultimately, the aviation industry is here to stay. Lim says air travel remains the most efficient means of transporting people over large distances. “...[It] just happens to be the [channel] that would accelerate the spread of the disease if nothing was done about it,” he adds.
That is why Lufthansa Consulting’s Jahnke expects air travel to grow again after the pandemic fades. He is convinced that the megatrends of globalisation and increasing mobility remain intact, drawing reference to how air travel recovered after the SARS epidemic. “We expect the passenger numbers to grow again,” he says.
