Chamberlink after ‘doomsday’ Covid-19 crisis
Leading the charge: Ryanair and its controversial CEO Michael O’Leary is already planning to operate this summer
some 300 million passengers through its airport infrastructure in 2019. However, the Covid-19 impact
has seen the daily throughput at Heathrow alone drop from an average of 220,000 passengers per day to barely 15,000. The economics of airlines and to
some extent airports, although they sound complicated businesses, are relatively simple. They are about a fixed cost base
and volume capacity and a market price. The operational gearing is such
that if you structure your business well you can achieve a very reasonable financial return, generate cash and keep both customers and shareholders relatively happy. With this downturn, there are no winners. The air transport market looked
buoyant a few months back with a backlog of orders for the manufacturers.
‘You’ve got to convince your customers that it is safe and they are not going to get the disease in transit, the flight that they have now booked will fly and if it doesn’t they will get a refund’
The first signs of trouble happened in Boeing with its B737 Max flight control issues which brought that production line to a halt while they sought to make modifications. Airbus also had a massive backlog
with only one problem child in their civil aircraft portfolio, the A380 super jumbo, whose production they had decided to stop. Airlines had been cancelling A380
orders and grounding the aircraft because of the increased efficiency and more market adaptable twin- engine aircraft like the Boeing Dreamliner and the Airbus A350. However, in a short space of five months, what was an aircraft
shortage is now a glut. Airlines were desperate for pilots
and where ticket yields had been improving kept in check by the oil price the turnaround is now the complete opposite – closed or restricted borders, too may aircraft, too many pilots, too few passengers and almost free oil. It’s a doomsday scenario writ large. Getting back into the air will be a
massive market challenge. You’ve got to convince your
customers that it is safe and they are not going to get the disease in transit, the flight that they have now booked will fly and if it doesn’t they will get a refund. In my 35-plus years in the
industry, I have never witnessed the impacts we are seeing today. Eyjallajoekull, the Icelandic
volcano, the financial crash and even the tragic 9/11 attacks are nothing to the impact that this virus metered on society and the industry. So, what will happen? Well I am
an eternal optimist. One thing is for sure that it may take time but we will get back in the air. We’ve come so far at making the world a small place. Part of the problem with connectivity is that it let the virus run free, but we have the wherewithal to recover and make progress again. The flying business really started
with the Wright Brothers in 1903 and there are people out there that will continue to push the boundaries and get us back in the air safely and more importantly safely back on the ground too. It might just be that the cheeky Irishman running Ryanair starts us all off again.
June/July 2020 CHAMBERLINK 55
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