Covid-19; Impact on the aviation industry

05-08-2020 5:03pm

based on the last few posts ponder this:
What was more discretionary, business or private travel.
Few would have challenged the idea that business travel was absolutely essential as efficient organisations aren't in the business of wasting money while the LCCs were and still are the carriers who Ecomentalists would label as enablers of frivolous travel while Legacy carriers are paragons of virtue.
What is more the LCCs pack them in like Sardines.
Maybe the Environmentalists won't abandon the idea that all travel is frivolous but at least come around to the idea that flat taxes per passenger aren't very fair and linking to co2 emitted per passenger might be a better thing to campaign for in future.

PommieBast · 05-08-2020 7:00pm

Nijmegen wrote: »

As a corporate CFO unless you have a very specific reason for travel - eg Apple sending engineers to and from factories in China - and much of your budget is spent on the nebulous "meetings" category, you have to be reconsidering these contracts.

A close relative of mine is on the board of the LSE and what I hear from them is that business travel will never recover. Having now done even some pretty major stuff like mergers without anyone flying, there is no incentive to go back to flying for meetings at $8000 a pop.

Tenger · 05-08-2020 8:34pm

I certainly agree regarding corporate travel.
Distance/virtual meeting was previously a niche element. Old fashioned conference calls were not seen as "optimal" for business relationship.
I really think companies are going to be examining their discretionary travel budget (as well as their monthly office rents) from 2021 onwards.

For aviation, a truism was that the front seats was where the profit was made. So if the front seats are no longer filled then premium heavy airlines will be impacted badly. (BA would be an obvious example here)

Foggy43 · 05-08-2020 9:14pm

Tenger wrote: »

I certainly agree regarding corporate travel.
Distance/virtual meeting was previously a niche element. Old fashioned conference calls were not seen as "optimal" for business relationship.
I really think companies are going to be examining their discretionary travel budget (as well as their monthly office rents) from 2021 onwards.

For aviation, a truism was that the front seats was where the profit was made. So if the front seats are no longer filled then premium heavy airlines will be impacted badly. (BA would be an obvious example here)

BA keep telling us they will never be the same again. BA made 70% of it's profit on cororate travel to and from the USA. We must wait and see if corporate travel will ever recover. A worrying example is while furloughing BA bosses do not need to come and talk to us anymore. All done over the web on your PC or smart device. BA did issue most of it's staff with iPads a few years ago.

Acosta · 05-08-2020 9:17pm

goingnowhere wrote: »

I'd say ORK would go first, SNN has business which despite the COVID is still there, lots of 767's showing up for gas going to interesting places its also a ETOPS diversion field

Whatever else Aer Lingus will operate Heathrow and Amsterdam out of Cork through the winter. Ryanair's eastern European flights which have been very busy should continue to operate and probably a couple of London flights too. Stobart have delayed coming back but I'd imagine they will operate some flights over the winter. Not sure what the intentions of KLM, Air France and Swiss are at this point.

It's grim but the airport will still probably be a lot busier than Shannon passenger wise.

Also worth noting that the current Taoiseach and two ministers are in the constituency of Cork Airport.

AnRothar · 05-08-2020 9:20pm

Acosta wrote: »

Also worth noting that the current Taoiseach and two ministers are in the constituency of Cork Airport.

The more things change the more they stay the same.

Nijmegen · 05-08-2020 11:05pm

Tenger wrote: »

I certainly agree regarding corporate travel.
Distance/virtual meeting was previously a niche element. Old fashioned conference calls were not seen as "optimal" for business relationship.
I really think companies are going to be examining their discretionary travel budget (as well as their monthly office rents) from 2021 onwards.

For aviation, a truism was that the front seats was where the profit was made. So if the front seats are no longer filled then premium heavy airlines will be impacted badly. (BA would be an obvious example here)

I’ve read various analysis that puts business travel at 60-75% of the profits of the passenger end of the airline. Basically everyone down the back is there to cover the cost of getting into the air and the lads up the front make the money.

Also worth noting that a lot of US carriers make significant - like half or more - their profits from deals with credit card companies for miles etc. A lot of that in turn is driven by business travel expenses.

Interesting wide ranging article from the economist on the whole system view of the shock in aviation. Speculating at one point that Boeing and Airbus may keep churning out white tails to keep the supply chain alive. Strong argument for them getting govt subsidies or support (even random defence contracts) to keep them going I’d say.

https://www.economist.com/business/2020/08/01/air-travels-sudden-collapse-will-reshape-a-trillion-dollar-industry

Blut2 · 05-08-2020 11:24pm

^It'd be very worthwhile for the EU or European governments to offer subsidies (even just hefty tax rebates?) to European airlines to replace older, less fuel efficient models with newer Airbus planes rolling off the production line.

Keep the Airbus production line going, keep the smaller suppliers in business, keep those jobs/that staff expertise from being lost, and reduce pollution/fuel consumption across Europe. And also reduce operational costs for the struggling airlines while they're at it.

It would have a huge number of positives.

snotboogie · 07-08-2020 12:11am

Tenger wrote: »

I certainly agree regarding corporate travel.
Distance/virtual meeting was previously a niche element. Old fashioned conference calls were not seen as "optimal" for business relationship.
I really think companies are going to be examining their discretionary travel budget (as well as their monthly office rents) from 2021 onwards.

What companies are you working for?? Every time you had to have a meeting with somebody not in your office you hopped on a plane? I'd stuggle to believe that teleconferencing was a niche element of any large business over the last 20 years.

For the entire time I have been in the workforce 95%+ of meetings with somebody not on site are done via phone or Skype/Zoom.

Somewhat seperately, as somebody who has done a huge portion of my work over Zoom, Skype and Teams, especially in the last 3 years, its not all a bed of roses. The majority of meetings can be done remotely but there is absolutely value in face to face interaction. I heard an interesting interview with the WordPress CEO, a company who have been 100% remote for over a decade and he emphasised the importance of bringing his teams together in person a few times a year.

MrMusician18 · 07-08-2020 2:01am

snotboogie wrote: »

What companies are you working for?? Every time you had to have a meeting with somebody not in your office you hopped on a plane? I'd stuggle to believe that teleconferencing was a niche element of any large business over the last 20 years.

For the entire time I have been in the workforce 95%+ of meetings with somebody not on site are done via phone or Skype/Zoom.

Somewhat seperately, as somebody who has done a huge portion of my work over Zoom, Skype and Teams, especially in the last 3 years, its not all a bed of roses. The majority of meetings can be done remotely but there is absolutely value in face to face interaction. I heard an interesting interview with the WordPress CEO, a company who have been 100% remote for over a decade and he emphasised the importance of bringing his teams together in person a few times a year.

There are, or rather were organisations like that where so meetings at a certain level would always have been attended physically or with most one or two dialling in. Corporate senior meetings where everyone remotes in were a rarity.

I'm not sure all that much is lost without the physical presence. The importance of social interaction at work is overstated.
In my own experience there has yet to be a situation where remote working gotten in the way or has caused an issue that wouldn't have arisen were we present in the office. For me it has been the bed of roses and to be honest if I never went back, I wouldn't be upset.

snotboogie · 07-08-2020 8:41am

MrMusician18 wrote: »

There are, or rather were organisations like that where so meetings at a certain level would always have been attended physically or with most one or two dialling in. Corporate senior meetings where everyone remotes in were a rarity.

I'm not sure all that much is lost without the physical presence. The importance of social interaction at work is overstated.
In my own experience there has yet to be a situation where remote working gotten in the way or has caused an issue that wouldn't have arisen were we present in the office. For me it has been the bed of roses and to be honest if I never went back, I wouldn't be upset.

Agree that most meetings can be done remotely but completely disagree that there is no value in face to face interaction. I guess everyone's experience is different.

goingnowhere · 07-08-2020 8:52am

For extremely sensitive matters face to face will still be needed. You don't know who is hidden behind the camera on a VC

The major issue here is business travel tended to be on demand and booked relatively close to travel date with little flexibility so a captive market, not the book 6 months ahead on a whim for flight for 9.99

Business travel is what fills planes on a Tuesday in November...

snotboogie · 07-08-2020 9:14am

goingnowhere wrote: »

For extremely sensitive matters face to face will still be needed. You don't know who is hidden behind the camera on a VC

The major issue here is business travel tended to be on demand and booked relatively close to travel date with little flexibility so a captive market, not the book 6 months ahead on a whim for flight for 9.99

Business travel is what fills planes on a Tuesday in November...

My prediction/hope is that offices will be reimagined as places where people come to meet as opposed to places where people come to work. This could help a lot of the hospitality sector in places like Dublin, where people are driving up from all around the country once a month for thee days of meetings. In the multinational sector you could see a democratisation of business travel. Instead of the executive traveling 40 times a year you could have a dispersed workforce where most people travel 4 to 5 times per year for team meetings and project work, similar to the WordPress model.

Nijmegen · 07-08-2020 10:38am

Business travel, and short turnaround business travel, is incredibly common and incredibly profitable for airlines - riding up the front often as not, last minute tickets booked etc, without getting into corporates who sign big ticket contracts (because they have so much travel to begin with).

I've been in meetings with people who were told they needed to join a day beforehand, who flew TATL and went home the same day. I've been in one part of the US packing up to go home on a Thursday night to arrive Friday morning, to be told I'd be needed in another part of the US the following Monday. (I decided to go home anyway and see my family before returning. Sorry, Greta.) The meeting on the Monday? Interview a candidate for a senior role at an airport hotel, a last minute addition to the process. Two hours with the candidate and fly home. (Flying for interviews in the US for corporate roles, incidentally, is extremely common). Corporates make these ludicrous decisions all the time.

Will this still occur post covid? Yes. Will it occur to the same degree? Likely not.

Inquitus · 07-08-2020 11:59am

Nijmegen wrote: »

Will this still occur post covid? Yes. Will it occur to the same degree? Likely not.

My US multinational employer has already mentioned that one of the outcomes of this Covid-19 Pandemic, and the lessons they have learned on remote working etc, will be less business travel and less office space required when the pandemic has passed.

Coil Kilcrea · 07-08-2020 12:05pm

Much of the business travel I did was global in nature and for the most part, transaction based. It’s difficult to assess both people and physical assets from a distance. Meetings that involve reporting or general talking shops were a waste of time and terribly inefficient. Many would drown out the cruelty with after dinner drink sessions. Presence doesn’t guarantee productivity. A lot of this type of business travel will probably not return for a while.

And while I’m being somewhat extreme to make the point, some stuff simply can’t be completed properly on video or phone.

Nijmegen · 07-08-2020 1:19pm

Coil Kilcrea wrote: »

Much of the business travel I did was global in nature and for the most part, transaction based. It’s difficult to assess both people and physical assets from a distance. Meetings that involve reporting or general talking shops were a waste of time and terribly inefficient. Many would drown out the cruelty with after dinner drink sessions. Presence doesn’t guarantee productivity. A lot of this type of business travel will probably not return for a while.

And while I’m being somewhat extreme to make the point, some stuff simply can’t be completed properly on video or phone.

Agreed, but the balance is likely going to be a lot more considered. Firms are going to continue to send their engineers to factories in the far east, for example. But there is sort of an automatic "go and meet them" approach to many things that will be paused and considered against a conf call.

The cost to a business of travel is enormous. Forget about the flights and the hotels, the amount of time lost to it is a productivity sucker.

Inquitus · 07-08-2020 1:30pm

British Airways doing a massive cull today, as well as drastically cutting some wages!

More than 6,000 British Airways staff have accepted voluntary redundancy as the airline moves to tell thousands more cabin crew and ground staff whether or not they will keep their jobs or face pay cuts.

The airline, which is seeking to make up to 12,000 job cuts to slash costs as the coronavirus pandemic hammers the travel market, was on Friday sending one of three letters to affected staff who have not taken voluntary redundancy.

https://www.theguardian.com/business/2020/aug/07/thousands-of-ba-staff-to-find-out-if-they-will-lose-jobs-due-to-covid

goingnowhere · 07-08-2020 1:38pm

I've done more than my share of travel and when the cabin crew and check in staff start to recognise you are in trouble.

Sensitive business will always be done in person, yes I have been that person off screen on a VC call. I would never have a VC call to discuss a serious HR matter. All kinds of data protection issues, recording etc.

I've hand carried sensitive equipment, traveled to specific places to inspect and test. I'd probably be in France or Germany right now if they were green countries.

The day of everyone flying in for a board meetings, training etc are gone and rightly so.

Masala · 07-08-2020 2:17pm

Inquitus wrote: »

British Airways doing a massive cull today, as well as drastically cutting some wages!

https://www.theguardian.com/business/2020/aug/07/thousands-of-ba-staff-to-find-out-if-they-will-lose-jobs-due-to-covid

I wonder what the 'offer' is for redundancy??? Generous or bare min of 2 weeks?

x567 · 07-08-2020 6:26pm

It's easy to forget how relatively recent much of the development and mainstream adoption of technology to enable remote working and meetings really is. Fax machines were only just becoming commonplace when I started work; and in the ensuing nearly 40 years the pace of change has been pretty fast. It's only really in the last 20 years - the lifespan of a typical plane - that the technology for VC meetings has been viable; and probably only the last five years or so when it's been reliable, widely installed by those outside of the IT/tech world, and reasonably accessible to all. So I think there was always going to be an inevitable lag between the adoption of these technologies and a resultant gradual reduction in 'business' travel. Covid however is changing this gradual change in working practices into an enforced step-change; and I agree that we will now see far less corporate travel - particularly for board meetings, sales jollies, wear-the-corporate-bomber-jacket conferences, and the like; thankfully.

In my line of work however, - similarly to goingnowhere above and I think to several other business sectors - a good majority of the international travel that I've done has been necessary and in my view would still be today. So I don't think this is necessarily armageddon for the airlines once restrictions and attitudes to travel start to relax, just a serious re-focus and re-sizing of their business offering and the value for money that it offers.

All of that said, it's very sad to see many of the people I've come to know over the years during my travels being badly affected or losing their livelihoods in an environment where it may take a while for new opportunities to surface.

smurfjed · 08-08-2020 1:43pm

10,000 staff, the unions are blaming the airline, the airline blaming the unions, I wonder how far apart they were in their discussions.

More than 10,000 British Airways staff are being made redundant as the airline scrambles to cut costs to survive the
In a sign of the brutal cuts workers were facing at Britain's flag carrier, more than 6,000 employees across the business applied for voluntary redundancy.
A further 4,000 were due to be told yesterday that they were being laid off.

Foggy43 · 08-08-2020 2:37pm

smurfjed wrote: »

10,000 staff, the unions are blaming the airline, the airline blaming the unions, I wonder how far apart they were in their discussions.

All staff are getting a letter/email saying they are being laid off. It will be the next paragraph that matters. It will tell the person either that it's goodbye, thank you for your service, or goodbye but they can reapply for their jobs but on new terms and conditions.
As far as I know BALPA, the pilots union, are the only people negotiating with BA bosses.
The other unions want BA to continue with furloughing until it ceases October 31. BA are saying no.

Van.Bosch · 09-08-2020 10:58pm

I think I initially underestimated the impact on the aviation industry. I usually take about 15 flights a year on business and maybe 8-10 personal. Initially I just though airlines have to get the head down and get through 2020 but the more I think of it the more f**kef the industry is.

I prob won’t travel for business for at least 18 months and even personal flights will be massively reduced as it’s so difficult to say with any certainty what you could do next year in terms of holidays. I’m determined to go abroad next year but am likely to book very late whereas usually I would book this year for next - that kind of delayed booking will kill airlines as the lack of cash flow will severely restrict them.

Don’t have a solution just dawned on me how tough it is

smurfjed · 10-08-2020 8:31am

Norwegian Air Shuttle stock price dropped 15% on Friday and appears to be continuing the drop this morning, presently at €1.38, in Feb it was over €42.00

smurfjed · 10-08-2020 12:10pm

This is interesting from Eurocontrol

http://https://twitter.com/eurocontroldg/status/1292125590884175875?s=21 https://twitter.com/eurocontroldg/status/1292125590884175875?s=21

cson · 10-08-2020 3:53pm

Re business travel, I think this tweet is a solid take & reflective of what's happening in the US right now; https://twitter.com/AirlineFlyer/status/1292806396602470401

I know in my place, we aren't going to be doing any business travel til Q2-21 best case scenario.

MacronvFrugals · 10-08-2020 4:54pm

Not the airline industry but got a letter off JMG cruises today to tell us they're entering administration.

Tenger · 10-08-2020 9:07pm

Inquitus wrote: »

My US multinational employer has already mentioned that one of the outcomes of this Covid-19 Pandemic, and the lessons they have learned on remote working etc, will be less business travel and less office space required when the pandemic has passed.

This is another knock-on effect: those shiny modern office buildings in city centres/downtown areas that large companies use as a status symbol will soon be seen as an expensive luxury cost.
If you can have 20-40% of your workforce working remotely they will save massively on annual lease costs by relocating to smaller premises.

Lockheed · 10-08-2020 9:45pm

Tenger wrote: »

This is another knock-on effect: those shiny modern office buildings in city centres/downtown areas that large companies use as a status symbol will soon be seen as an expensive luxury cost.
If you can have 20-40% of your workforce working remotely they will save massively on annual lease costs by relocating to smaller premises.

I wonder how many office developments in Dublin and other cities will seek a zoning change. I've always thought there were way too many offices going up before, now we just are stuck with this vast excess already, not even including the future developments. To keep it on topic I doubt the aviation regulatory offices are going to remain in Dublin 2. It was a silly decision by Guiomard back in the day anyway. You'd wonder whether Aercap would consider relocating too think they're pretty central

Covid-19; Impact on the aviation industry

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