Airline Trends

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Airline Trends

From offering insanely cheap deals, introducing new waiver policies, blocking out middle seat booking to paying half the price of tourist flights, airlines in different countries including China, the UAE, the United States, and Italy are using creative ways to lure passengers back in the COVID-19 era.

Ways Countries Are Luring Back Travelers

  • In China, regional airlines, including Air Guilin, Guizhou Airlines, and Hainan Airlines, are adding new domestic routes to lure passengers back during the summer and fall seasons.
  • Some airlines in the country are offering insanely cheap deals for domestic flights in what the local media have dubbed "bok choy-price" tickets because they are cheaper than the price of vegetables. For example, a trip from Beijing to Yantai (about 700 kilometers) costs $11 — about 90% of the original price.
  • Other airlines like West Air and Urumqi Air are running campaigns that enable travelers to gain an extra ticket for making a single ticket purchase. Another company, Shandong Airlines, recently introduced "Magic Boxes" for $28 each, which can be substituted for any domestic tickets at any price during the fourth quarter of 2020.
  • China Eastern and West Air are trying to lure back customers by selling additional seats at discounts. China Express, one of the leading airlines in the country, is offering six extra seats to passengers for the price of a single economy-class seat. According to CNN Travel, "the ticket price includes coronavirus-specific insurance and an anti-virus pack with face masks and anti-bacterial wipes."
  • UAE-based airlines like Emirates, Air Arabia, and Flydubai, as well as Etihad, are not left behind. These companies have introduced new waiver policies that allow travelers who wish to modify their travel bookings to do so at no charge and re-issuance fees. They also offer full refunds for cancellations and have intensified the recommended hygiene standards aboard in a bid to lure travelers back.
  • Virgin Australia and Qantas in the United States are not filling planes to capacity and are blocking middle seat booking as a safety step to lure travelers back onto their planes during the pandemic.
  • The regional government of Sicily in Italy will pay half the price of tourists' flight tickets a move aimed at luring holidaymakers after COVID-19 lockdown.

Regulatory Changes in 2020

  • Under an old rule, domestic airlines in the U.S. were required to provide access to food, water, and bathrooms in flights that delayed for at least two hours or offer a chance to disembark if the flights delayed for three hours. However, this rule was recently revised by the U.S. Department of Transportation requiring it to define a practice as "unfair" and only levy a civil fine against an airline if it "causes or is likely to cause substantial injury, which is not reasonably avoidable, and the harm is not outweighed by benefits to consumers or competition."
  • In March 2020, the United States Senate passed a new law, the CARES Act, that authorizes the Secretary of the US Treasury Department to make loans and loan guarantees to US airline carriers to the tune of $61 billion, empowering them to cushion the economic impact of COVID-19.
  • The Civil Aviation Administration of China (CAAC) passed a new rule that will impose tighter flight restrictions to international destinations. Airlines are only allowed one flight per week to any nation, and the capacity will be a maximum of 75%.
  • In Europe, the EU Commission announced a new regulation that will "release airlines from slot-use obligations to ease pressure on carriers as they cut capacity to cope with COVID-19 outbreak effects."
  • In March 2020, the Civil Aviation Authority (CAA) became the United Kingdom's new overseer and regulator of all aspects of civil aviation after the country's exit from the European Union Aviation Safety Agency (EASA).
  • Canada announced swiping regulations in mid-March that restrict international travel and arrivals and require airlines to ban symptomatic passengers from boarding flights to Canada.
  • Domestic flights in the country also face tighter regulations. For example, new laws require airlines to ban anyone displaying COVID-19 symptoms from traveling to other regions.

Economic Impact of COVID-19

  • The International Air Transport Association (IATA) predicted, on 5 March 2020, that the global airline industry will lose over $113 billion of revenue due to the impact of the COVID-19 crisis. However, that scenario excludes the severe governments (including the US, Israel, and Spain) measures to suspend travel on a large basis.
  • On 21 April 2020, IATA revised this figure upward, estimating that the industry will lose nearly US$252 billion in 2020.
  • In Japan, the Scheduled Airlines Association determined that leading carriers such as Japan Airlines (JAL) and All Nippon Airways (ANA) will lose over ¥400 billion in revenue in the four months leading to and through May. Overall, the airline industry could suffer revenue losses to the tune of ¥1 trillion ($9.3 billion) over the next 12 months, according to the aviation association.
  • Most airlines in the United States are reducing their flight capacity by more than 90% in the COVID-19 era. In April, only about 100,000 people were flying per day in the country compared to one million passengers daily in early March.
  • The airline industry in Europe lost about 67 million passengers in Q1 2020 due to the sudden outbreak of COVID-19. This affected regional airlines like Flybe UK, which was already in a financial crisis before the COVID-19 pandemic, to collapse leaving the few remaining passengers stranded.
  • The UAE and Saudi Arabia are each expected to lose about 30 million passengers due to the travel restrictions imposed by the governments. As a result, Saudi Arabia will lose revenues of $7.2 billion, risking 287,500 jobs, and the UAE revenues of $6.8 billion, risking 378,700 jobs.

Reopening Plans For Businesses In The Industry

  • Businesses in the US airline industry will enhance hygiene procedures as they plan to reopen as safely as possible. These procedures include promoting health screening measures for workers and isolating those exhibiting COVID-19 symptoms, implementing online ticketing, virtual check-in, touchless ID check, and other touchless solutions, and intensifying sanitation measures specially designed to combat the reproduction of COVID-19.
  • American Airlines, Southwest Airlines, Delta Air Lines, and United Airlines are taking aggressive measures to reopen their businesses, including blocking out middle seats to "fogging cabins with disinfectant to restricting food service."
  • Airlines in Sydney Australia are recommending temperature checks, contact tracing, social distancing, and wearing masks to reassure passengers as they plan to restart air travel.
  • South Korea based-Korean Air Lines has contracted Credit Suisse (CS) as the lead manager for the sale of some business units, a move intended to inject capital in the company while it prepares for increased travel demand when countries begin to lift restrictions on international travel. The airline plans to reopen flights on 19 international destinations on June 1, including Washington, DC, Toronto, Kuala Lumpur, and Seattle, as it endeavors to offset the losses brought about by the new norm.
  • The Vietnamese airline industry has recommended a phased increase in domestic routes to meet growing travel demands as multiple tourist destinations in the country reopen after the COVID-19 lockdown. For example, it proposes "increasing frequency on the Hanoi-HCMC route to 50 return flights a day and on routes from Hanoi and HCMC to Da Nang to 20 flights per day."

Social Trends Affecting The Global Airline Industry

  • Social loyalty & gamification and maneuvering online and offline community are some social trends that various airlines participate in, in the global market.

Social Loyalty & Gamification

  • The global airline market is shifting towards social loyalty and gamification. Airlines are now getting into location-based services to "track loyalty in terms of repeat visits as well as social advocacy."
  • They are doing this by giving real-world bonuses to followers, and members who promote their label online.
  • Airlines such as Virgin America, Air New Zealand, JetBlue, and Lufthansa have "launched campaigns that reward their fans and followers for 'checking in' into their virtual venues." This trend is reference by multiple authoritative articles as one of the key social trends impacting the global airline industry.

Maneuvering of Online and Offline Community

  • This is another trend referenced by multiple authoritative articles. According to research, global airlines are maneuvering an online and offline community to generate more revenues. About 75% of air tickets are currently purchased online and most check-ins are also done online.
  • However, some customers still prefer interacting with a customer service agent when it relates to complaints and challenges. As a result, airlines are investing in offline channels "by activating a click-to-call feature either on their Websites or on the travel agencies' Websites."
  • Airlines like LATAM Airlines and Singapore Airlines are using third-party technologies like Smartvel to "deliver a visually rich experience to potential clients." The Smartvel app provides clients with cheap flight options, online ticket booking, and a click-to-call feature for reaching the customer support teams.
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