This is in continuation to a previous blog on the topic of airlines impacted by COVID-19. I would encourage you to read that blog, if you haven’t done so already.
It is widely believed that the worst is over. The airline industry has seen the very bottom of demand after being battered by the effects of COVID-19. In March, the restrictions on travel in the EU put 10.2 million seats in jeopardy. Lufthansa ground 700 aircraft and dropped passenger capacity by 95%. By April 14, the Transport Security Administration (TSA) recorded the lowest throughput in the US with just 87,534 travelers as opposed to over 2.2 Million for the same weekend in 2019. Delta Air Lines halved its active fleet, parking almost 600 aircraft and was hurrying up the retirement of older aircraft. Governments across the world have rushed to disburse aid to the massively hit sector. Accordingly, the narrative has now shifted to preparation for the resumption of service. The industry has even seen a mild and encouraging uptick. It must be made amply clear that ‘resumption of service’ is a figurative way of saying ‘working towards fuller schedules’ (domestic service never stopped completely) and does not in any way mean recovery.
Recovery, and its pace, cannot be predicted for the airline industry at the moment, given the unprecedented situation. We could however attempt to draw scenarios for demand, and piece together a proactive strategy based on scenario planning.
Hope cannot be a strategy. The need of this hour is to plan for customers in two time horizons:
- Near term – to bounce back quickly
- Long term - to strengthen the product and business model
At Mindtree, we are certain that demand will return and the world will travel again. Hence, travel service providers, especially airlines, need to plan for what they can control.
This readiness can be broadly divided into three areas:
- Health and safety measures – personal safety of passengers and staff
- Financial liquidity – to decrease cost base and preserve cash
- Recovery strategy– working towards resumption of travel
Technology has a critical role to play in each of the three areas.
1. Health and safety measures
This is the most important area that airlines must address. Psychology has established the importance of safety – check Maslow's classic hierarchy of needs – long before COVID-19 arrived. Airlines can reassure passengers about their commitment to health and safety by bringing laser focus to:
- Cleaning measures
- Cleaning robots for better ‘turn cleaning’ using UV and electrostatic sprays
- Online communication of cleaning certificates after monthly deep cleaning procedures of the aircraft
- Temperature checks
- Ability to have thermal scanners integrated into central database for immediate response and contact tracing
- Video surveillance combined with thermal scans to tie biometrics with risk identification
- At the airport or terminal measures
- Cleansing pods/tunnels
- No-touch check-in kiosks and bag drop with sanitized baggage tags
- Health passports and no contact immigration process
- Social distancing and virtual queue management solutions
- Location-based limits of passengers within airport zones
- Robots for sanitizing terminal areas, gates and aerobridges
2. Financial liquidity
Airlines have quickly gone into cost cutting mode with reductions in planned spending and work programs, and are trimming the cost base, consolidating airport operations, streamlining operations and simplifying fleets. In general, cash burn has been coming down, with most airlines targeting a 50% decrease in their cost base. The long term measures that airlines must take include increasing the digital footprint for customer-facing processes and moving from a capex to an opex scenario, with higher adoption of cloud computing.
We, at Mindtree, are reimagining possibilities in the new normal by helping enterprises adapt to the new business ecosystem with resilience. Our propositions for the new normal include accelerating virtual operations, expediting business agility and catalyzing digital-led growth. These offerings have been put in place using our collective expertise and experience in the travel industry to mitigate impact and re-start growth:
- Virtual operations – This proposition focuses on reducing the cognitive load and enabling collaboration for the remote workforce. Our solutions provide cognitive agents for digitizing contact centers and self-service options on mobile apps. There has been rapid evolution in the cognitive/voice space, and these solutions are far superior to what they were barely 6 to 12 months ago. Another area that can be a critical intervention for the airline industry and which has seen several magnitudes of improvements is a centralized command center for virtual operations for load planning, airport operations, etc.
- Expediting business agility – CIO imperatives for the new normal include reducing costs and transitioning to an opex model powered by hyper automation, accelerated DevOps and expedited cloud migration. Mindtree possesses strong expertise in the travel sector, having implemented accelerated platform-based DevOps adoption in applications like crew scheduling. We have also helped airlines in cutting down cloud assessment/ migration time by half, using remote assessment. Our data platforms and experience in the modernization of cargo applications are also extremely well suited to help lead the coming change.
- Catalyzing digital-led growth – Focusing on digital customer experience is the key to defending and propelling growth amidst this disruption and beyond. E-commerce and mobile will play a significant role in this. Delta has already begun offering complimentary hygiene kits to passengers. In line with such initiatives, we will soon see new ancillary products crop up like ‘Middle seat free’ or inflight masks/sanitizers. Mobile will adopt a new role as we re-evaluate customer journeys to minimize touch points without sacrificing passenger interaction. All this while improving the ability to keep them informed about safety, health, personal well-being and self-service options at every step.
3. Recovery strategy
We are approaching a period where resumption of service will become the key theme in the industry. At Mindtree, we believe that IT will be pivotal to recovery and will determine how efficiently airlines rebound from the most challenging period in aviation history. For this, we are ready with services to address:
- Maintenance and operations – As aircrafts come out of long-term storage (and even from short-term parking programs) and load factors move above the single digits, these planes will have to adapt to daily operations schedules, placing inordinate pressure on maintenance.
- Booking efficiency and stickiness – Searches for the spring break in 2021 and even for travel queries for the later part of 2020 are slowly building up. Airlines will have to create strategies that prevent the erosion of these bookings and make the load factors sticky. It is now vital to re-evaluate content strategy and improve mobile capabilities so that post booking interactions with passengers help in nurturing and retaining them.
- Fuller cargo solutions – There is a change in the business model as passenger airlines consider offering spare capacity for cargo-only operations. This means current cargo solutions for booking and tracking need to be enhanced with digital capabilities to manage the new revenue stream. At Mindtree, we have two decades of experience in this area that allow us to customize and deploy solutions quickly.
- Re-training employees – Managing operations with new processes aimed at ensuring passenger safety and maintaining improved health standards, across fleet types, mean that employees will have to be trained in diverse areas using online platforms.
There is no doubt that the industry will emerge from this crisis stronger and ready to serve customers better. It is also an opportunity to consider long term product and business model improvements. Mindtree’s vast industry experience allows us to play a major role in assisting airlines in their path to recovery. We are sure that IT will be a critical enabler in providing better, stronger and resilient service to the passenger of tomorrow. If you would like to discuss this with us, pleases write to us at email@example.com.