Emirates President & Etihad CEO speaks on how Emirates & Etihad will cope under the current COVID19 pandemic
Source: UAE Business Council - Webinar
The whole aviation industry is in survival mode, they are short of cash. All airlines (no exceptions) are desperate to conserve their cash reserves.
- Widespread job losses are now expected. Many airlines are closing or significantly reducing its size. British Airways have announced they will cut 12,000 positions from the airline's 42,000 strong workforce. Their management said they do not expect BA to see passenger demand return to last year's levels for at least 3 years or longer. Qatar Airways tells staff "very grim aviation outlook"and say they have no choice but will lay off staff as widespread travel bans have paralysed the aviation industry. Akbar Al Baker (CEO) said the numbers to be laid off would be "substantial" and include most members of its cabin crew. Many of the borders are closed, and very unlikely to be reopened until say a vaccine is found perhaps in 2021 at the earliest. Virgin Airline has this week made 3,150 staff including most of its cabin crew redundant.
- Pilot credentials - Pilots need to maintain their ratings or permits and may not have up to date certificates will be an issue. Expired credentials will be a problem.
- Getting aircrafts back to service is yet another challenge.
- Border restrictions - Many countries will not lift their travel restrictions and have said they expect this to be in force or partially in force until the start of 2021.
- Social distancing will be required when regular flying resumes. Lufthansa is already operating services where middle seats are left unoccupied in order to allow a certain degree of social distancing on board. EasyJet - which has grounded its entire fleet - says it will do the same when it resumes flying. The idea of reconfiguring planes, removing seats on planes or permanently factoring in spacing requirements in the future – in line with social distancing measures – is untenable and not sustainable, Mr Clark said.
- Load Capacity - In order to make money, airlines need as many seats as possible to be filled on every flight. "Load factors" are particularly important.
But if middle seats are left unoccupied, aircraft will have to fly just 65% full and be losing money.
- Quarantine for incoming tourists - There will be some countries like UK is considering forcing all passengers arriving in the country to spend two weeks in quarantine until the vaccine can be found.
- Business Travel will change. High-paying business and first class travellers usually account for a little under a third of the revenues for the industry as a whole. For long-haul carriers like Emirates, it can be as much as 70%. These are serious threats to Emirates.
- Predicted Global Recession, cancellation of trade fairs and another cancellation of next year's Olympics could delay recovery.
- Fear of travel leading to plunge in demand. Mr Clark said he views the pandemic as a black swan event for the airline industry. Many people are not going to feel safe going back to crowded airplanes ... until they see that the number of new deaths from the virus has gone down to almost none in their region, or until there is a vaccine or much better ways of tracing and isolating who has it. People are likely to consider air travel risky until a vaccine is found. Many have said they will not be travelling this year. More will do staycations instead.
- Increased air fares to cover for social distancing will be passed onto the customer. Economy fares could be double what we are used to paying.
How long will this go on for? No one knows but all the CEOs of the major global airlines are not optimistic about it and it could be years. Travel restrictions, closing of borders and fear of travel could lead even to more damage to the aviation industry. Mr Clark added. "It’s hugely serious and it’s devastating for the business. I don’t see any way forward at the moment.” “We have just got to accept that in the next year or two, perhaps a bit longer, demand for air travel is going to be tempered in many respects,” he said. “What emerges from this will be in my view almost perhaps 20 or 30 per cent less than what we were experiencing prior to the coronavirus kicking in.”
Final view from Mr Clark “My own view, my gut feel is telling me that by the summer of next year 2021 we could be well on our way to mass global inoculation … and therefore things will change. If that happens all this business about spacing on aeroplanes, on buses, trains and restaurants and hotels goes away,” he added. “In the meantime of course, as long as this is going on, and if it’s another year then we are going to have to live with the agonies as far as air transport is concerned … with countries … taking down lockdown procedures.”
Have confidence if you are in Emirates Mr Clark said "the government is the owner of Emirates. When the time is right, and I think everything is OK, I will retire".