When the COVID-19 situation in the country escalated prior to the enhanced community quarantine, major low-cost carriers had to lay off workers and enforce pay cuts to mitigate the effects of the lockdown. Philippine Airlines announced last February that they had let go of 300 employees amid business restructuring and the pandemic. Early March, Cebu Pacific had to terminate over 150 new cabin crew members, and its senior management took salary reductions to prevent further layoffs.
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The local aviation industry took a bigger hit when the government suspended all domestic and international travel in and out of the country. Only “sweeper flights,” special trips made to safely repatriate Filipinos stranded abroad and foreigners stuck in the Philippines, were gracing the skies in the past weeks. Over 30,000 flights have been canceled, affecting around five million passengers.
In a letter dated March 25, the Air Carriers Association of the Philippines (ACAP)—comprised of AirAsia, Philippine Airlines, Cebu Pacific—appealed to the government for easier access to credit lines and a long-term relief plan to offset the lack of revenue and expensive fixed costs. The group acknowledged the waived airport and landing charges provided earlier; however, with the worsening effects of the pandemic, ACAP said that it is crucial to have ready access to resources to keep operations running and ensure the industry’s survival. The group assured that their loans will be secured with collaterals to make the aviation industry more appealing to the banking sector. (Currently, banks have tightened credit toward airlines.)
ACAP’s request also ran in line with the International Air Transport Association’s (IATA) grim forecast for the aviation industry in the Philippines and Asia-Pacific. In a press release dated April 3, the association forecasted that the country will have almost 420,000 jobs at risk as passenger demand decreases by 36 percent for the rest of the year. “This is based on a scenario where severe restrictions on travel are lifted after 3 months, followed by gradual recovery,” according to the IATA. Almost 21.88 million passengers will be affected and roughly $3.5 million dollars will be lost in the process.
Across the Asia-Pacific region, however, the Philippines is at the lower end of the spectrum in terms of passenger demand reductions, joined by Vietnam and Cambodia at 34 percent each. Sri Lanka is projected to experience the largest impact with a decrease of 44 percent, followed by Thailand, Pakistan, and South Korea at 40 percent each.
Winds of change
Alexander Lao, Cebu Pacific’s chief strategy officer, acknowledges that the fluid COVID-19 situation makes it challenging to craft recovery plans for the industry. “While there will be a recovery, it may take some time before business goes back to normal,” he says in an e-mail interview. “As this is quite a dynamic and rapidly changing scenario, we cannot provide exact guidance, but our conservative outlook is that there will be a gradual recovery and we are hopeful that things normalize by the end of the year. Our top priority in the meantime is to look after the welfare of our passengers, as well as our employees amidst this challenging time.”
Depending on how the situation progresses, Lao says that Cebu Pacific is planning a gradual reintroduction of their network. “We will likely begin the reinstatement of trunk domestic routes and, depending on travel restrictions, possibly some international markets. [However, we are] keeping in mind that this may be a time when only essential travel will be done.”
In terms of passenger behavior, Lao predicts that while leisure travel will rebound, other segments may change. “Business travel will probably be less as people get used to do online meetings,” he surmises.
Even if the industry has learned lessons from the SARS pandemic of the 2000s, Lao notes that today’s challenge is different and still ongoing. “We anticipate the possibility of additional requirements or regulations imposed on the travel industry, once the situation stabilizes and some degree of normalcy returns,” he reiterates. “Previous learnings such as agility and market responsiveness will hold true in this crisis as well.”
Adjustments and compromise
While the private airline industry is quite different from commercial aviation in terms of scale and clientele, precautions and insights can be drawn from the former to anticipate new regulations and trends in travel for the general public.
“Our private jets were also busy shuttling people back home amid the crisis,” says Ian Moore, chief commercial officer (CCO) of VistaJet, in an online webinar with other leaders in the hospitality industry. “In each location we flew in and out of, we had to make sure that we’ve observed proper safety measures per location and inside our jets,” he adds.
VistaJet, for instance, has enforced stricter passenger screenings and regular crew and pilot check-ups. Handshake greetings have also been prohibited and supplies like masks and gloves are kept in abundant supply. Medical teams are also on standby on ground and air to attend to passengers.
The CCO emphasizes that aviation companies and their communication teams have to be more proactive than ever to keep stakeholder relations and trust. “For private operators, they have to be transparent about the flight history of the plane, the owners of the jets, and the sanitary measures taken inside the vehicle. Frequent charter flight customers will now be more wary of these details,” he reiterates.
While Moore acknowledges that new flight protocols in the private jet industry might be more challenging to impose on a commercial scale, bigger players will have to make concerted efforts to make mass travel safer and more appealing to consumers moving forward.
“Constant dialogue between airports and airline carriers will be crucial. Airlines have to be more sensitive toward additional regulations imposed in different countries,” he adds. “Moreover, they have to consistently communicate with their customers and assure them that steps are being taken to make their travel experience as safe and seamless as possible.”