Airlines – the end of golden days or “the beginning of our third epoch”? 12/04/2022, by Yeoh Siew Hoon, in Corporate Travel, Destination Marketing, Distribution, Featured, Regions, Sectors “Traumatised, shocked and stunned, but we will get over it,” says Emirates’ Sir Tim Clark
SO on the one hand, you have Peter Harbison, executive chairman, CAPA (Centre of Aviation) painting a rather grim picture for the future of aviation – he believes the golden days may be over – and on the other, Sir Tim Clark, president of Emirates declaring “the beginning of our third epoch” .
Whichever side you are on, there’s no denying the reality that airlines, having been through the worst storm, are emerging into what many call the perfect long storm of forces which will persist long after this pandemic is declared over.
In his opening address, Harbison declaring “in the history of modern aviation, there has never been a time when there were so many forces of change”, reeled off a list – massive debt, rising interest rates, stagflation, prolonged high fuel costs with the war on Ukraine a “nice cherry on the cake”, emissions reductions costs, need to invest in new tech, resources/supply chain issues, longhaul narrow body aircraft orders and their transformational impact on routes, dominance of lessors, dozens of new entrants and a changing world order.
And if that were not enough, there’s changing passenger profiles. “Are passengers ready to fly again and pay higher prices?” asked Harbison, who questioned, “does anyone seriously think it’s over? Many travellers don’t.”
Regardless, he believes business travel will be reduced – he reckoned by at least 20% – and leisure travellers will prefer simple, low priced, point-to-point travel – all of which will reshape longhaul.
The increase in orders for narrow body aircraft – these aircraft are meant for intra-regional or domestic routes and they produce 30% lower emissions – also means markets would be transformed, said Harbison, leading him to question the future global role for the Middle East carriers which are connectors. Sir Tim Clark: “Change of the segments and the behavioural characteristics of those segments are changing and due to technology, we have a better chance of understanding consumer behavior at the micro level.” Two challenges that Sir Tim immediately responded to. On passenger demand, he said, “The market has come back. Yes, it’s been traumatic but for some strange reason, trauma engenders increased demand and spawns […]