United Airlines Director UK, Ireland and Israel, Bob Schumacher, gave the inside track on the state of airline recovery to Reed & Mackay clients from the insurance, legal and financial sectors – among others – and outlined reasons behind the challenges business travel managers may still be facing with flights, post-pandemic.
According to the International Civil Aviation Organisation, in 2019 more than half the world’s population – 4.5 billion – took to the skies. This, understandably, dropped to 1.8 billion in 2020, grew back to 2.2 billion in 2021 and is estimated to reach 3.7 billion by the end of this year. COVID-19 has clearly had a knock-on effect but there are other challenges the industry – and therefore corporate travel – is facing, Schumacher explained.
WHAT ARE THE CHALLENGES FACING THE AIRLINE INDUSTRY?
“Pre-2019, the aviation industry faced capacity constraints focused on runway space, parking stands and terminal space; in 2022 those constraints focus on regulations, testing, bureaucracy and uncertainty with COVID-19, the transition to hybrid working and whether travellers still view travel as ‘fun’ if they’re having to wear face coverings for their journey,” Schumacher said.
The airline industry still needs to address issues around labour shortages. While United Airlines kept the majority of its pilots and airport staff during the pandemic, airlines are dependent on full staffing levels around every touchpoint in the supply chain, from fuelling, baggage and security to air traffic control – and that’s where labour shortages continue.
When these challenges were married with the pent-up demand to travel from the leisure market that led to some airports – including London Heathrow and Amsterdam’s Schiphol – introducing passenger number caps this summer, Schumacher acknowledged this year has been a “perfect storm of events”.
“However, we feel that, if we were faced with another pandemic, we now know how to upscale and downscale the airline better,” he added. “We’re in a better place as a society in how to deal with it and have reinforced with government – particularly in the US – about how essential airlines are as a ‘utility’.”
WHAT CAN BUSINESS TRAVELLERS EXPECT FROM AIRLINES IN 2023?
Schumacher pointed out that, as well as the challenges above, the way people travel has changed, leading to a boost in demand at certain times. And, with that boost, has come a growth in the number of flights.
“With hybrid working, people can now work wherever they like, so the fluidity of people travelling has smoothed out across the week, and we’re also seeing a change with more travellers blending business and leisure travel,” he said. “We know people want to travel as people need that human connection; therefore United Airlines is bringing in 23 flights per day next year – the largest airline across the Atlantic to all points in Europe. And the industry forecast for London Heathrow, for example, is that it expects to be fully operational by summer 2023.”
However, this does come with a caveat that travelling towards the end of this year could remain a challenge. “Airports are consulting the aviation industry about where they may need to constrain supply…and are saying that the jury’s still out for the Christmas and New Year period, depending on the labour market situation at airports,” Schumacher added.
How are airlines addressing the sustainability question?
Climate change is something mankind must address; and the aviation industry is particularly raw to its challenges, as it is much more difficult for the aviation industry to decarbonise than for other industries.
IATA member airlines have committed to achieving net zero carbon emissions from their operations by 2050 and, with the estimated growth in air travel, the need for sustainable fuel for the aviation sector will increase dramatically. IATA’s near-term ambition is to see 10% of aviation fuel consumed being Sustainable Aviation Fuel (SAF)by 2030.
“SAF certainly has a role to play – and we’ve seen a dramatic rise in RFPs asking what we’re doing in the sustainability sphere since the pandemic,” Schumacher said. “In fact, every one of our flights that leaves Los Angeles and Amsterdam uses SAF – but there is more to be done.
“This includes our order of close to 500 new airplanes that will burn >20% less fuel than the aircraft they replace. However, because of the pandemic (and other factors around certification) much airplane production has been lost and there are delivery back-logs across the industry.”
Schumacher pointed to United Airlines’ investment in the use of hydrogen as a fuel source but highlighted those aircrafts will need to be totally redesigned to use such a power source. He added that hydrogen is a less dense energy source and so will require larger aircraft for longer-haul flying just to store the fuel. Airport infrastructure would also need to fundamentally change to accommodate such a radical evolution.
“Yet, as an industry, we have a social responsibility; to that end, we want to attract and retain the brightest minds from the next generation to aviation, show them we are responsible citizens and demonstrate that, with them joining the industry, they can be the people to lead change,” he added.
Cementing relationships with tmcs
Schumacher acknowledged that the airline industry still has huge challenges to face, yet is doing everything it can to address them. One way of doing this is through their relationships with TMCs. “We’ve always considered our relationship with TMCs to be critical and, coming out of the pandemic, that’s been cemented further,” he said. “TMCs are an essential part of our distribution and many of our customers are corporate business travellers. With all these complex issues the industry is still facing, TMCs offer added value because of the reassurance they can give to clients.”
Reed & Mackay Director, Air Partnerships EMEA, Richard Lindsay, agreed that working closely with airline partners such as United Airlines provides clients with essential industry insight. “These partnerships allow us to continue delivering an extraordinary experience for our clients; communication is key and together we can help clients surpass their travel programme objectives,” he said.
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