Airlines look past slow recovery to post-pandemic travel

Even as new setbacks cloud their path to recovery, airline bosses are focusing on the lasting impact of COVID-19 on premium travel, technology and other pillars of their business.

Aviation leaders, forced to gather virtually by the pandemic, have been gauging its longer-term fallout at the World Aviation Festival, after more than a year of lockdowns.

Drawing many top executives and thousands of participants, this week’s event comes as doubts over the northern summer vacation season renew scrutiny of airlines’ cash and their ability to withstand another washout.

The addition of France, Britain and 114 other states to the U.S. “Do Not Travel” list has also cast a pall.

“There will be a lot of carriers that will not make it through,” Air France-KLM Chief Executive Ben Smith said, citing nameless rivals that were “not viable prior to the crisis”.

For survivors like state-backed Air France-KLM, market consolidation would be welcome, Smith said, adding: “Even if it takes longer than planned for traffic to return, with a reduction in capacity that’s a good balance for us”.

Air France-KLM expects to need more capital following a 10.4 billion euro ($12.5 billion) bailout in 2020 and 1 billion-euro share issue this week. Long-haul juggernaut Emirates may also need to raise more cash within months, the Gulf carrier’s President Tim Clark said during the event.

BUSINESS DECLINE

Despite the deep uncertainties, executives are looking beyond the pandemic to anticipate underlying shifts.

High on the list is a structural slump in business travel as many future meetings – if not airline conferences – stay online.

“A large percentage of this traffic will not come back on long-haul,” aviation consultant John Strickland predicted, as companies curb travel costs and carbon emissions.

“You can’t beat face-to-face in many business situations,” he said. “However a big amount can be cut.”

That will hit yields, or fare levels, Clark and his Virgin Atlantic counterpart Shai Weiss acknowledged, although the Emirates boss expects leisure customers to fill business cabins.

“If you drop (fares) by 15% or 20% they will come to business,” Clark said. Such customers are “not quite as good as the corporate segments were, but hey ho, you take what you can get and you fill your aircraft.”