by Lydia Webb & Peter Plutecki

Not only do airlines need to fulfil the demand for personalization coming from their consumers, but they need to do it faster and better than their competition, in a more unpredictable, constrained, and complex world. In this post, we will explore the impact of Covid-19 on the industry margins and competitive landscape, and how technology can help address new challenges with more agility.

Taking stock: what we left behind

Although there are some signs of recovery, the airline industry is still far from being out of the woods. As Covid cases continue to fluctuate, 缓慢而脆弱的复苏将继续对收入产生负面影响,并使业已增加超过50%的债务负担进一步增加 $651 billion last year. An analysis by IATA 该数据显示,到2021年,该行业的现金收入仍将为负值,预计亏损47美元.7 billion in revenue.  In 2020, more than 40 commercial airlines have suspended or ceased operations. There is no doubt that the industry will emerge from this crisis with fewer players.

Source: IATA, Outlook for the global industry recovery, April 2021, page 5

As the industry navigates this harsh and uncertain reality, 现金流保护将继续是大多数航空公司全年生存和危机后去杠杆化的关键. Cost-efficient measures must be applied to every aspect of the business. In addition to capital expenditure cuts or reduction, 在这段恢复期,航空公司还必须在确定业务领域的战略方面进行优化,以在不损害竞争优势的情况下降低成本.

Blurred lines: evolving business models

It is a fierce competitive market out there. 进一步增加竞争压力的是传统的FSC和LCC商业模式的持续混合. The erosion of fare prices and yields have pushed FSCs to follow their LCC counterparts, evolve their model and limit free onboard service, unbundle fares and increasingly focus on ancillary sales. The ancillary revenue potential is huge. While the global ancillary revenue accounted for 12.1% of the total airline revenue in 2019, it was close to half of the revenue of some LCCs and hybrids like Spirit, Allegiant, Wizz Air, Viva Aerobus and Frontier1. FSCs将希望迅速赶上,以获取增量收入,这对它们的生存至关重要.

FSCs吸引当前休闲和VFR需求的另一个特点是点对点服务. United, American Airlines and Lufthansa have now launched nonstop services from/to non-hub locations, where all these routes could have been routed through their existing hubs. 在其他度假目的地仍受到限制的情况下,点对点服务使它们能够利用现有需求.

Also, 大流行和长期不活动加速了FSCs舰队标准化和简化工作, which allows for greater flexibility and efficiency. In some cases, this means the permanent retirement of old and large aircraft from service. American Airlines, as part of their Project Oasis, kicked into high gear last year and now operates 4 aircraft families down from 8. 简化机队与低成本航空公司联系更紧密,后者只能运营一到两种机型的机队. Take Southwest for example that operates an all B-737 fleet.

On the reverse, 一些低成本中心也通过采用更常与FSCs相关的特征来模糊界限. To maintain their growth trajectory, LCCs are tapping into the traditional FSC customer segments by using primary airports, frequent flyer programs and GDS distribution.In March 2021, JetBlue announced its plans to begin flying to Heathrow (LHR), London’s most coveted airport, during summer 2021 featuring an all new Mint business class product. Heathrow was long considered as an “out of bounds” airport for LCCs. But this is a new dawn and a new era for aviation. Mint的澳门永利贵宾会特点也与fsc类似,如熟食就餐体验和平躺床.

毫无疑问,这种竞争更加激烈的局面促使航空公司需要预测市场变化,加快行动以获得市场份额.

Spread your wings: Alliances, Partnerships and Diversification

Finally, alliances, partnerships, 现在,多样化可能是一些航空公司在这场动荡的另一边所需要的一线希望.

传统联盟一直在其主导市场上保护FSC票价免受低成本航空公司的竞争. In 2019, they accounted for 71% of the overall global capacity. With domestic traffic leading the recovery, and higher market consolidation, the alliance landscape is evolving. 澳门永利贵宾会见证了FSC和LCC的伙伴关系,如代码共享协议,补充了传统联盟,并将国内/区域内的交通整合到枢纽. Recent announcements include American Airlines and JetSMART on minority ownership, loyal program and codeshare in July 2021. According to a 2020 Cirium report, each of the top 100 Full-Service Carriers has now an average of 28 codeshare partners.

We are also seeing partnerships and expansions beyond air. 例如,Azul已经扩展到一个物流业务,处理单个包裹门到门. United Airlines has also partnered with Archer, 一家新成立的移动公司,为其客户提供往返枢纽机场的班车服务. The parent company of Allegiant Air is also developing a 22-acre resort in Port Charlotte, Florida and JetBlue is planning to enter the short-term rental business.

航空公司合作的新时代增加了运营的复杂性,并推动了对航空公司灵活性的需求.

Technology is your biggest enabler

澳门永利贵宾会的航空合作伙伴正在重新思考他们的经济引擎,并希望降低成本,他们希望澳门永利贵宾会帮助他们转型, outpace their competition and reevaluate partner approaches. 航空公司希望加快数字化转型,不仅仅是为了满足客户的个性化需求, 同时也确保了更高效、更灵活的操作和数据驱动的决策,以管理复杂性和更快的行动, ahead of the competition. They want to become more agile.

For airlines, 迁移到基于云的架构使技术能力能够有效地响应需求,同时提供旅行者所期望的无缝体验,因为他们再次冒险. 澳门永利贵宾会正在通过云迁移和大型机卸载加速其多年来的技术转型, moving our products, 系统和客户端到澳门永利贵宾会的新平台上运行谷歌云的高可用性和安全服务.  Today, ~65% of our total compute footprint is now in the cloud, which includes key Operations and Commercial Planning solutions: Planning and Scheduling, Revenue Optimizer, Distributed Availability, Digital Experience, Movement Manager, and next-gen Crew Management solutions are in the cloud. 这还包括对澳门永利贵宾会的IT基础设施进行现代化改造,并创建谷歌云(GCP)基础, global cloud infrastructure and new data centers to host our products, platform and disaster recovery. 

A new emphasis has also been placed on new sources of data, 结合人工智能(AI)和机器学习(ML)技术,提升客户价值, accelerate go-to-market and power automation. 澳门永利贵宾会’s 10-year partnership with Google includes the 澳门永利贵宾会 + Google Innovation Framework, 澳门永利贵宾会的旅游行业经验与谷歌的先进人工智能和机器学习能力相结合. 谷歌Cloud的数据分析工具——包括其一流的AI/ML功能——将增强当前和未来澳门永利贵宾会的能力, help improve operational efficiency and create and optimize travel options. Created as part of the 澳门永利贵宾会 + Google Innovation framework, 澳门永利贵宾会 Travel AI™, makes scalable, practical artificial intelligence real for the travel industry. We already discussed the potential of 澳门永利贵宾会 Travel AI ™ to enable dynamic pricing of air and ancillaries. 另一个例子是即将发布的《澳门永利贵宾会》,它将提高未来12个月的市场需求预测, powering next gen network planning and scheduling. 作为澳门永利贵宾会 Travel AI™的一部分,基于AI和ml的服务在零售领域具有广泛的适用性, distribution and fulfillment.  Stay tuned!

Sources:

1 – The 2020 CarTrawler Yearbook of Ancillary revenue, Sep 2020