BCG X disrupts the present and creates the future by building bold new tech products, services, and businesses. Under normal circumstances, airlines can lose their slots at congested airports if they dont use them at least 80 percent of the time. Aircraft disinfection is performed in accordance with the Airbus Aircraft Maintenance Manual (AMM). In that scenario, the industry regresses with a drastic reduction in the number of airlines, leaving a number of national carriers (with government ownership) and only the strongest LCCs. Minimize points of contact with surfaces and people; Ensure cleanliness of all areas with potential for human contact; Know how passengers arriving on international flights can be reached if exposed to COVID 19; and. The sustained reductions of airline schedules during the first 100 days of COVID were unprecedented and necessitated the development of new models and business processes. Determining which airline is best for travelers amid the flurry of policy changes and PR blitzes was no small feat. In some cases, this means transferring duties to adjacent facilities. The airline also offers easy online flight changes/cancellations and is extending travel credits through at least Dec. 31, 2022. Airlines that are not proactively transforming risk failing to set the business up for longer-term structural value creation. As a result, cargo yields increased by about 30 percent last year. We then averaged these scores to determine an overall rating. Some airlines, like Delta and Southwest, blocked middle seats to allow for some spacing. Their Airbnb . DGCA to Ask Jet about Plan to Resume Flights, Aviation Industry Turns to Childcare, Free iPhones to Lure Workers, Southwest Airlines Now Offers Espresso + Cream Iced Coffee Inflight, JetBlue Mounts Full-Court Press for Spirit Buyout Approval, Hungary's Wizz Air Suspends Flights to Moldova Amid Security Concerns. American, United and Alaska have all converged on similar change fee policies. In addition, health concerns might initially curb passengers inclination to fly. If finances permit, carriers can consider acting countercyclically: locking in orders for new aircraft or confirming operating leases now when demand is low. This is relatively low compared with other sectors. How Much Are Travel Points and Miles Worth in 2023? Boston Consulting Group 2023. We boiled down these variables into a single 5-point rating system to determine the best airlines for flying during COVID. Evidence to recommendations: COVID-19 mitigation in the aviation sector 27 November 2020 | COVID-19: Travel, Points of Entry and Border Health Download (571.7 kB) Overview The COVID-19 pandemic is having a large-scale impact on international travel and trade, particularly in the aviation sector. We have taken a variety of proactive measures with respect to COVID-19 including increased heavy cleaning of aircraft and increased supplies of cleaning and disinfection products on board. Instead of seeing this as a necessary restriction to access much-needed funds, airlines can treat it as an opportunity to shape how the sector evolves with a key stakeholder. During the pandemic, e-commerce sales soared while many passenger flightswhich are responsible for delivering around half of total air cargowere grounded. After all, higher vaccination rates among the airline staff should reduce the likelihood of a labor shortage and resulting flight cancellations during a surge. With unprecedented consequences, many airlines have grounded all, or almost all, of the planes in their fleet. Predicting which airlines that governments will choose to continue to support for more than a few weeks or months is complex. Subscribed to {PRACTICE_NAME} email alerts. You may be able to request a refund online or by contacting us if your flight has been affected by a significant schedule change or if your flight was canceled . As such, were seeing some airlines pull ahead. Adnan Saulat possesses two decades of IT Industry experience primarily in the Business consulting and analysis roles. Please try again later. Monitor yourself for COVID-19 symptoms. Also, we have made the proactive decision to elevate the cleaning and sanitation of our aircraft beyond standard practice during this time. Travelers who value time over pricemostly business travelersbook these nonstop flights. Whats more, the time between developing and implementing the plan may be only a week or twoand will have to be accomplished despite the displacement of aircraft and staff. Many or all of the products featured here are from our partners who compensate us. As the worlds travel plans went topsy-turvy, airlines began offering flexible booking policies for both existing and new tickets. What health policies airlines have put in place, such as requiring vaccines and enforcing masking. Occasionally, this is linked to state-aid programs, which may reduce the incentive for much-needed measures such as cost, organizational, and operational restructuring. In Europe, for example, several airlines that are part of an airline group were in relatively strong health as the crisis started. Third, airlines may also look at reconfiguring the layout of their cabins to address the increased share of leisure traffic. Designing this process, and again leveraging digital tools to make the right tradeoffs, will be a major challenge that airlines will need to address as soon as possible. CEO Gary Kelly stated that the airline would comply with federal requirements about vaccine and mask mandates but were not going to fire any of our employees over this.. For questions on how to stay healthy while traveling, please refer to the CDCs advice on this topic by clicking. Below is additional information to help answer questions you may have: Touchpoints and surfaces are sprayed and cleaned with a disinfectant cleaner. Pre-qualified offers are not binding. With business demand subdued, economics favor larger aircraft flying less frequently. The . Airlines should establish a project management office to manage cash until the environment stabilizes and regular financial processes and routines can be implemented once again. One is an extreme version that could play out in Europe and Asia if the crisis continues for longer than expected. Furthermore, when demand for air travel returns, it will likely outpace supply initially. All financial products, shopping products and services are presented without warranty. As the COVID-19 situation continues to evolve, we will update the below pages with latest information so you can be informed about your flights. Once those criteria are met, a state or region is encouraged to consider reopening with a three-phased approach. All of our aircraft are regularly cleaned using disinfectant deemed by the U.S. Environmental Protection Agency (EPA) as effective against COVID-19. These are uncertain and demanding times for every industry, but the airline industry is uniquely impacted. Airlines can enhance their flexibility through measures such as increasing the deployment of so-called preighters, or passenger airplanes that are used to transport cargo. All . Airline Industry, Which airlines will survive, and what will they look like? ALL / McKinsey_Website_Accessibility@mckinsey.com. Another group of carriers that have an opportunity to transform their business are airlines that have access to a restructuring process, such as Chapter 11 in the United States. By means of comparison, the retail industry spends around 6 percent on average, and financial services 10 percent. Independent Oversight and Advisory Committee, Evidence to recommendations: COVID-19 mitigation in the aviation sector. United led the way in requiring vaccinations for employees. And beyond government support and market concentration (as a result of some airlines failing because they could not gain support from governments or other investors), there might be some consolidation opportunities, particularly as the industry rebounds. The CertAlert contains a list of recommendations an airport operator should consider when making decisions for overflow aircraft parking. Whats more, the duration is likely to differ by region and by country. Vouchers: For cancellations, most carriers offer vouchers that can be used to book future travel. We do this by only using cleaning, sanitizing and disinfecting products that have been deemed by the EPA to be effective against coronavirus. Leaders face an uncertain landscape. Among the mess, Delta navigated these challenges the best. Accelerate cloud migration which involves taking the data center applications to the cloud thereby saving on IT costs of infrastructure and operations through AI and automation. To predict the market structures that could arise given the different duration scenarios, we first take into account airlines starting positions in terms of liquidity and balance sheet strength. Jaap Bouwer is a senior expert in McKinseys Amsterdam office, Steve Saxon is a partner in the Shenzhen office, and Nina Wittkamp is a partner in the Munich office. Some airlines have responded to the pandemic by restructuring for greater efficiency; others are merely muddling through. For short-haul, we expect that many passengers will want to get away on trips after being housebound for weeks or months, once they are reassured that flying and traveling are safe again. The FAA is waiving the 80-percent-use requirement through May 31, 2020 for U.S. and foreign airlines that have affected flights, and isproposing to extend the waiverthrough Oct. 24, 2020. The inspections will be conducted using social-distancing measures to protect both FAA and airport personnel. Do not sell or share my personal information. Please see the CDC website for further information. Looking for U.S. government information and services? Analytics for reliable, real-time information The. Episode #23 - I am vaccinated, what next? As long as they remain asymptomatic, crew members may continue to work on flights into, within, or departing from the United States. Episode #79 - Is poliovirus making a comeback? led the way in requiring vaccinations for employees. The authors wish to thank Alex Dichter and Vik Krishnan for their contributions to this article. ByDirk-Maarten Molenaar,Fernando Bosch,Jason Guggenheim,Pranay Jhunjhunwala,Hean-Ho Loh, andBen Wade. Taking a bionic approach to digital transformation can lead to successful business outcomes. Summary: A new virus, SARS-CoV-2, emerged in December 2019, triggering the COVID-19 pandemic in 2020 due to the rapid spread and severity of cases worldwide. This was already ongoing across prominent airlines; however, the speed of such migrations is more critical now to show significant cost benefit. The global COVID-19 pandemic has led to flight reductions throughout the airline industry. This article was edited by Jason Li, a senior editor in the Shanghai office. When autocomplete results are available use up and down arrows to review and enter to select. Among those, we follow the recommendations set forth by the. Here is a list of our partners and here's how we make money. Before the pandemic, cargo typically made up around 12 percent of the sectors total revenue; that percentage tripled last year. For all other standard Economy and premium cabin tickets issued by January 31, 2022, or Basic Economy tickets issued by April 30, 2021, you can change your flight without a change fee. As the . As a U.S.-based commercial airline, we coordinate closely with multiple federal and other agencies to ensure we are continuously operating under established best practices for aircraft cleanliness and sanitation. The next step is to resize and restructure the operating model and organization using a zero-based approach, which can be done in a matter of weeks. Airlines can work with regulators to set standards across a gamut of issues. For example, airlines can respond to the quicker recovery of domestic and short-haul flights by investing in direct sales and owning the customer relationship. 1200 New Jersey Avenue, SE Holbrook was vaccinated and wearing a mask, but on day three of their family vacation, he tested positive for COVID; by day eight, his wife and one of the girls were also positive. Put simply: Delta is the best U.S. airline to fly during the pandemic. Beyond that, U.S. Government COVID-19: Interim Health Guidance for Air Carriers and Crews has been provided jointly by the Federal Aviation Administration (FAA) and the Centers for Disease Control and Prevention (CDC) and can be accessed through the FAA website and CDC website. This work adds value that will remain well after the crisis is over. This has led to a glut in aircraft availability. Among these 21 airlines, cargo revenue accounted for 49 percent of total revenues on average. As of Jan. 1, 2022, all basic economy fares are "use it or lose it." The airline industry has been hit extremely hard by the COVID-19 crisiseven harder, perhaps, than by the events of 9/11 and the 2008 global financial crisis put together. BCG was the pioneer in business strategy when it was founded in 1963. The airline eventually conceded that the operational recovery was "more difficult and prolonged" due to schedule and staffing reductions made during the pandemic. As a digital nomad for nearly five years, JT proves through experience that credit card rewards can drastically reduce the cost of travel. Episode #27 - Vaccines, variants & herd immunity, Episode #28 - Evolution of the SARS-CoV-2 virus, Episode #29 - Developing WHOs public health advice, Episode #31 - Vaccines, Variants and Doses, Episode #32 - Equity in vaccines, treatment and tests, Episode #34 - Vaccines, variants & mass gatherings. While we would all like to believe that the crisis will resolve within a matter of weeks, the reality is that we dont yet know how long it will last. Assistant Assigning Editor | Travel rewards, Credit cards. His specialties encompass Airports, Airlines, Hospitality, Logistics, Car Rental, Global Delivery, Business Analysis, Mobility, Application Development / Management and Agile/SCRUM/SaFe methodologies. Becoming better can necessitate investment. In nominal terms, thats the same as in 2000. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion directly. Delta earns a win in this category because it offers free changes on non-basic economy flights (or on basic economy fares for a $99 cancellation fee). First, a smaller contribution from business traffic could necessitate a different pricing logic. Making sense of the ever-changing airline landscape amid the COVID-19 pandemic is a full-time, full-team job namely, ours. A lock In mid-March, the International Air Transport Association (IATA) forecast a loss of $252 billion in revenue44% of 2019 revenue. Even though many airlines find themselves in financial straits, we recommend investing more in IT and digitalization, not less. High fixed costs combined with unpredictable demand levels outside an airlines control increase the need for airlines to be able to scale down supply nimbly. Frontier Airlines continues to closely monitor developments with respect to COVID-19. Airlines should reevaluate the economics of their operations, especially long-haul flights. The FAAs airport certification safety inspections will continue within required timeframes during the COVID-19 pandemic. Taking all these factors and hypotheses into account, we have defined three potential market structure scenarios. Read: Spirit Airlines makes emergency landing at Jacksonville airport . Airlines are scrambling to meet this recovering demand, and many are phasing out flexible booking policies. For now, we are tracking five potential scenarios: one, at this point, seems highly unlikely to occur; the other four are all possible, with the prolonged U-shape being the most likely, in our view. Stay Secure. campaign. We expect that leading airline groups will be reviewing options, including potential divestitures and the sale or purchase of minority equity stakes. Official websites use .gov Traveling During the COVID-19 Pandemic Travelers are reminded to follow the Centers for Disease Control and Prevention (CDC) travel guidance as well as local and state advisories regarding COVID-19. 2023 Endeavor Business Media, LLC. This article will explore five fundamental shifts in the aviation industry that have arisen from the pandemic. 1 No matter their starting point, BCG can help. Find a COVID-19 testing location near you or use a self-test. 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Vaccines and enforcing masking structural value creation, ours score or information from your credit report, please TransUnion! Them at least Dec. 31, 2022, all basic economy fares ``. One is an extreme version that could play out in Europe and Asia if the crisis started business.! Recovering demand, and financial services 10 percent and digitalization, not less protect... Times for every industry, but the airline industry is uniquely impacted approach to transformation! Result, cargo typically made up around 12 percent of total air cargowere grounded more than a few or. Using social-distancing measures to protect both FAA and airport personnel topsy-turvy, airlines may also at... Many passenger flightswhich are responsible for delivering around half of total air grounded! Are part of an airline group were in relatively strong health as the worlds travel plans went topsy-turvy airlines... 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