An airline recovery is at hand — or is it? Air traffic has recently soared though it is still lower than this time a year ago. Questions on getting back to normal abound. But when you look at leading indicators, consumer sentiment and actions the industry is taking to ramp up, we may be all surprised how quickly we will be flying again.
Here’s what you should watch out for in the coming months.
Safety: Vaccines, vaccines, vaccines
Of course, the efficacy of the COVID-19 vaccines — and how they’ll work against new, multiplying strains — is the principal factor in returning to a pre-COVID-19 flying experience.
Will we be able to subdue the coronavirus, like the flu, with a new vaccination each year? As of early March, the rates of new infections and deaths were dropping. Early research shows some vaccines are effective against several strains. And we have an increasing number of vaccine manufacturers with some inoculations requiring only one dose.
In one positive sign, President Biden has said the U.S. is on track to have enough vaccines for all American adults by the end of May. More vaccines mean more protection, less transmission and muted side effects. Once there is a critical mass of inoculations, along with fliers’ confidence — proven by exhaustive research — that they can’t readily contract the virus in the plane if protocols are followed, safety concerns will fade. Moreover, the industry is well on its way to being able to quickly implement a “vaccine passport,” which will certainly help alleviate passenger concerns about the other folks on the plane.
Demand: Deluge of domestic leisure travel
Ask yourself, do you know anyone who has said that they never plan on getting back on a plane? As more people get inoculated, demand for leisure travel will be unleashed. We’ve spent nearly a year confined to our homes. We need to feel connected.
Gross domestic product, (GDP) one of the airline industry’s favorite indicators of growth, is projected to rise. And case in point, one of the largest European leisure airlines said flight bookings surged 300 percent and vacation package bookings increased more than 600 percent after UK Prime Minister Boris Johnson announced the beginning of the end to the national COVID-19 lockdown.
I expect a deluge of bookings when most citizens are vaccinated and infection rates drop further. Airlines (and hotels) will also put travel on sale making it easier on the pocketbook for people to travel. Not to mention that Americans alone have saved $1.3 trillion more in 2020 than what they otherwise would have since the pandemic began.
Expect businesses to be more cautious. Zoom has proven to be a serviceable alternative to the face-to-face meeting, leaving no real urgency to resume those trips between corporate offices in Chicago and New York. Clients still working from home may wish to avoid in-person meetings.
Yet caution won’t last forever. Zoom is fine for maintaining existing relationships. But if you’re hoping for new customers and trying to win business, it’s not a long-term solution. Companies in expansion mode will send executives out again as soon as they are confident there are no major health risks.
A recent industry survey points to a growing desire to resume business travel in the right conditions — 79 percent of those polled said they would be “very comfortable” or “comfortable” traveling for business after being vaccinated.
Before airlines can again regularly offer convenient international flights, borders will need to reopen. Again, rollout of the vaccine passport will help convince governments that it is safe to open their borders.
Experience: Recreating ‘normal’
Airlines also face the task of recreating a sense of “normal” for fliers — an experience akin to one they might have had in 2019. That means giving passengers the choice of multiple airlines and multiple routes, plus more direct flights. It also means taming the auxiliary hassles of the post-COVID-19-era travel: quarantines; the negative COVID-19 test documents; and even precautions related to travel to-and-from and through airports.
The ongoing broad vaccine rollout is the key here. With wide talks of a vaccine passport, the industry is already finding ways to reduce, if not eliminate, some hassles that are prohibiting efficient travel. International travel organization IATA launched its digital travel pass with 30 airlines globally testing the program, but they are not without their issues. Still, they are an example of how the global airline industry has started to band together to address a common issue.
Flights: Restarting the ‘factory’
It all sounds promising, right? Pent-up demand, projected GDP growth and rising vaccinations suggest we will all be traveling again. But there are some wild cards. For one: Do airlines have the people and equipment available to ramp up quickly?
Meeting a surge in demand for flights isn’t as easy as you might think for carriers. The sheer intensity and length of the pandemic made this downturn unique. Airlines furloughed thousands of employees. Passengers stayed home. In April of last year, two-thirds of the world’s jets were grounded.
It requires time for carriers to rebuild their fleets. Think of it as restarting a factory. The longer it’s shut down, the longer it takes to get operational again. The same is true for aircraft — and their experienced personnel. The question now becomes whether airlines can reboot quickly enough. Those most poised for success are contracting with aircraft leasing companies that provide just-in-time planes and equipment (like engines). These companies can lease or even sell equipment in a matter of weeks or months, rather than the years required to order new aircraft from manufacturers.
Economic indicators are pointing to a surge in pent-up demand, and vaccines are rolling out in increasing numbers. As many important indicators show, the return to 2019 travel trends is at hand. It won’t happen overnight. But with the industry’s concerted efforts to work collectively to meet the growing demand, the path is becoming clearer. Pack those bags.
Mark Perez is a founding partner of Virgo Investment Group and board member for Zephyrus Aviation Capital.