The global aviation industry is undergoing huge changes as a
result of the Covid-19 pandemic. Mass layoffs, capacity reductions, scaling
back fleets for the long term, not to mention a raft of health and safety
measures that could stick around even after a vaccine is found – all of these
factors are quickly becoming the new reality for airlines, airports and scores
of industries that are dependent on aviation.
In Europe, the worst of the job losses were largely delayed
thanks to government-supported furlough schemes in countries such as Germany,
France, Denmark and the UK. But many of those schemes are winding down with no
indication from governments whether they might consider extending the support
for specific industries that will continue to be impacted by coronavirus
restrictions and uncertainty, as is the case in aviation.
With time running out to plan for low-than-average demand in
the already slow winter months, many companies are having to make tough
decisions about their workforces while still crying out for bespoke support to
help them survive.
British Airways looks set to make at least 10,000 job roles
redundant after initially planning 12,000 cuts, with those staying in employment reportedly facing a reduction in
pay and having to sign new contracts on reduced terms. Easyjet is in
consultation over up to 4,500 job cuts, with the airline already closing its
bases at Stansted, Southend and Newcastle as of today. Lufthansa originally
announced 22,000 redundancies in the works but has since reached agreements
with some unions to avoid or delay job losses. Ryanair, too, will downgrade its
original plan to cut up to 3,000 roles after agreeing pay cuts with the
majority of its pilots and cabin crew. Virgin Atlantic is planning up to 3,000
redundancies, and SAS up to 5,000. Finnair last week announced 1,000 job cuts,
while Norwegian has furloughed or laid off 8,000 employees since March and Air
France will reduce staffing numbers by 6,500 by 2022. Heathrow airport has
already cut frontline jobs and has warned more could become necessary without
government support, while Gatwick airport recently announced plans for 600
redundancies on top of 200 fixed-term contracts that were terminated early on
in the pandemic. Manchester Airports Group, which owns Stansted, Manchester and
East Midlands airports, has long warned employees are at risk of losing their
jobs as a result of the impact of the virus. Looking even further afield from
the direct aviation industry, major distribution player Sabre announced in June that it would cut around
800 jobs across 43 office locations.
Long story short: tens of thousands of people across Europe
either already have lost their jobs or are facing the reality that they might
not be able to go back to work this winter as originally hoped.
IATA recently updated its forecast for the aviation market,
saying its believes more than 7 million jobs supported by the industry are now
at risk in Europe alone – up from its estimate of 6 million jobs in June. The
organisation largely blames the disjointed approach to reopening borders in the
European Union and a lack of cohesion on safety protocols and restrictions such
as quarantine.
“It is desperately worrying to see a further decline in
prospects for air travel this year, and the knock-on impact for employment and
prosperity,” said Rafael Schvartzman, IATA’s regional vice president for
Europe. “It shows once again the terrible effect that is being felt by families
across Europe as border restrictions and quarantine continue. It is vital that
governments and industry work together to create a harmonised plan for
reopening borders.”
Airports Council International (ACI) Europe, too, has
highlighted the devastating impact on airports, with passenger traffic across
the continent down 64.2 per cent in the six months to 30 June. Director general
Olivier Jankovec said the industry’s recovery was “far too slow-paced and
uncertain” and that European airports are “burning cash” despite efforts to cut
costs. “If the recovery does not accelerate significantly, many airports will
simply run out of money,” Jankovec warned.
What it all means
There has been widespread consensus since the beginning of the pandemic – but particularly
in recent weeks – that the aviation industry will emerge from the crisis in a slimmed-down
form compared to what it was at the beginning of the year. The majority of airlines
will be smaller and continue to restrict capacity growth for at least two to
four years. Some, unfortunately, may not emerge at all. Smaller and regional
airports are under particular threat, as many rely on the peak summer holiday
season to boost their cash flow; that season either hasn’t happened or started
far too late for many of those airports.
Some airlines have already set plans in motion to scale back
their operations in the long term. Lufthansa is permanently reducing its fleet
by at least 100 aircraft and agreed to give up a number of airport slots in
Germany in order to secure billions of euros in emergency funding. Air France
and KLM have agreed to reduce domestic flights that compete with high-speed
rail lines as part of their government-backed bailouts. Virgin Atlantic has
decided not to return to Gatwick airport for some time. In addition to closing
its base at Southend, Easyjet announced it would permanently pull flights from
the airport.
With IATA predicting that passenger demand will not recover
to pre-Covid levels until at least 2024, it’s no wonder most airlines are
planning to hunker down on capacity restrictions for some time. Even Wizz Air,
which has been bullish in pushing ahead with new base openings and a plan to
establish a subsidiary in Abu Dhabi, admitted this week that it may have to
park some of its fleet through the winter season after projecting third-quarter
capacity to be roughly 60 per cent as opposed to the 80 per cent it previously
anticipated.
Battling uncertainty
For corporates and their travellers, all of these developments paired with
ever-changing travel restrictions are leading to a great deal of uncertainty.
Nobody is entirely sure how capacity cuts could impact air fares in the long
term. Airlines are in the dark about how to plan their future operations
because the longevity of the coronavirus situation is unprecedented and the
communication from governments around changing travel restrictions appears
incredibly limited. That means even travellers with confirmed bookings could
face last-minute cancellations if the carrier has to make tough decisions based
on passenger numbers.
Some airlines have attempted to win back traveller
confidence by extending the flexibility they introduced at the height of the
pandemic. Lufthansa has removed rebooking fees until the end of December and is
now allowing customers to change their tickets multiple times rather than just
once. It would not be surprising to see such measures extended even further as
airlines look to maintain consumer confidence until next summer, when many
believe the recovery could get underway in earnest.
Here to stay, too, could be the new cleaning and hygiene
protocols airlines and airports have put into place to reassure passengers. One
thing this pandemic has brought to the fore is a general awareness of how
quickly diseases can spread and get out of control, so one would expect people
will be paying close attention to details such as how often high-touch surfaces
are disinfected from now on, even after a vaccine is found and becomes widely
available. Many who have travelled in recent weeks have commented that new
boarding and disembarking procedures are more “civilised” than the usual way of
doing things, begging the question of whether airlines will face dissatisfied
customers if they try to make a return to old procedures when this is all over.
And the use of technology throughout the typical airport journey appears to
have boosted people’s confidence in using apps and mobile ticketing – something
that is not likely to diminish as the recovery continues.
If anything is certain about the crisis, it’s that changes –
both good and bad – are afoot and could amount to the largest and most sustained
shift in the aviation industry the world has seen in decades.