Post-Covid-19 Aviation Opportunities

As has been variously touted, every adversity presents with it an opportunity, if only we look closely enough. This COVID-19 pandemic has been no different, as it has created both hurdles and opportunities for entrepreneurs offering new products or services.

• Surplus Aircraft Capacity

Several airlines worldwide have had to shed substantial capacities in their fleets in the wake of the COVID-19 pandemic. This has been occasioned by the airport closures and international air travel bans and outright overcapacity in certain mature markets such as Europe, where increased market share is employed as competitive strategy.

In certain instances, some of these aircraft have been mothballed as a consequence of fleet rationalization and early retirements.

According to Boeing data, it is estimated that there are approximately 22,000 mainline wide body and single aisle jet aircraft in operation worldwide, including about 2,000 freighters.

This number is exclusive of the around 2,000 aircraft already in storage prior to the pandemic, including all the 380 Boeing B737-Max aircraft grounded in the aftermath of the two infamous crashes involving Ethiopian Airlines and Lion Air, and over 1700 regional aircraft decommissioned as a result of US scope clause issues.

Considering that it is estimated that about 50% of the entire world commercial aircraft fleet currently in service is in storage, this development provides a unique opportunity for new entrant airlines to source and acquire aircraft that can be quickly deployed into the market for the commencement of new operations or existing airlines for the expansion of their fleets for the introduction of new services in an expanded network.

• Depressed Aircraft Sale & Lease Rentals Values

The aircraft resale and leasing market is a function of demand and supply. With the demand currently low and an overabundance of available supply, the aircraft resale and lease rental values are bound to be depressed for some time yet pending the recovery of the industry and the rebound of the market.

Moreover, aircraft manufacturers, leasing companies and airlines are constrained by the availability of adequate storage capacity and the cost of storing hundreds of aircraft at the same time, not to mention the associated costs of active storage programmes.

This therefore necessitates possible quick deals where available to transfer the cost of ownership to third party new entrant or existing airlines, resulting in depressed aircraft sale and lease rental values.

• Technology

In the aftermath of the previous industry disruptions, it was argued that technology would impact the industry’s recovery in more damning ways than anticipated. Fast-forward a decade later with the COVID-19 pandemic, the impact could be even deeper simply because of the phenomenal improvements on the technological front.

Countless corporate meetings, government committees and even world leaders have successfully convened online, amply demonstrating this evolving technological trend.

Even though it is difficult to safely predict future passenger trends in a yet unfolding pandemic, given the proposed new industry protocols being touted whereby social and physical distancing will be encouraged, hence minimizing or completely eliminating interactions with agents and touching surfaces such as checking-in kiosks, technology will be used to bridge the gap.

Immediate consideration should be for paperless processes, be it boarding passes, ticketing, reservations, baggage tagging and tracking, and payments. In this regard, robotics, biometrics, automation and artificial intelligence will drive the emerging industry digital transformation and will present rapidly evolving opportunities for entrepreneurs steeped in technological innovation.

• In-flight Service

With the new world of contactless service delivery, the entire current in-flight service model will have to be reinvented. Gone are the days of having individual passengers take their fruits, biscuits, sweets or drinks choices from an open basket or trolley.

Welcome to the world of wholly sealed meals in tamper-proof packaging including ALL items on offer on each flight, hygienically prepared with utmost care.

This is in ensuring minimum physical human contact to avoid any possible contamination, from the point of preparation, en-route transportation to the in-flight delivery will become the norm. Initiatives to digitize the in-flight food service, onboard hospitality and shopping will gain ground and data analytics will ensure that passengers are presented with relevant and personalized meal offers.

This will provide boundless opportunities for proactive airline catering service providers cognizant of the new evolving order and technology will play a vital role in tracking all food packages from production to consumption.

• Innovation

The key to airports and airlines accelerating consumer confidence in the aftermath of this COVID-19 pandemic is by the wholesale adoption of innovation as a driver. Airlines will necessarily have to reinvent the travel experience and accelerating innovation will be key to reinstate short-term confidence and long-term business strategies.

Onboard connectivity will transform the in-flight experience from a closed and proprietary environment to an open and connected world, creating endless opportunities to generate ancillary revenues.

No doubt this undertaking will require that airlines consider the acquisition of new or modern aircraft in their fleets.

Possibly this operational pause would provide the ample time enough to holistically review the airline’s overall strategic plan in one fell swoop.

To be continued….

Wole Shadare