The struggling global aviation industry's revenues may reach 70 percent of the pre-COVID-19 levels in 2021, but complete recovery may take a bit longer as airlines across the world downsize operations to pare costs, said VK Mathews, Founder and Executive Chairman of IBS Software Services, a leading provider of SaaS solutions to the travel industry.
"Most of the airlines will look to lower their costs. This will include removing from their fleet four-engine aircraft like the Boeing 747, as these need a load factor of over 80 percent through the year to be viable," said Mathews, who founded IBS in 1997 after a 17-year stint in the aviation sector, including in Air India and Emirates. The industry veteran said a full recovery in revenues may happen by 2024.
The aviation has been among the most impacted industries globally since the pandemic brought economic activity to a halt. Even though much of the lockdown has been removed, recovery, especially in international travel, has been slow.
For instance, in India, the government now allows airlines to operate at 80 percent of their capacity on domestic routes. But international travel remains restricted.
At the same time, people are looking for a break, says Mathews, who recounted a recent meeting at a five-star resort hotel in Kerala that was booked through December. "People are keen to get out of their homes and get a break. So if you create the excitement of travel, and reassure them of safety, they will," he said.
Much of that onus will fall on governments and other stakeholders, including the airlines. And it depends on how fast airlines adopt the technology.
That will be central to the recovery, says Mathews. "Already, COVID-19 has brought in two years worth of digitisation in the travel industry, in two months. Airlines are increasingly becoming digital," Mathews told Moneycontrol.
IBS provides services to over 30 aviation companies, including American Airlines, Emirates, British Airways, Heathrow Airport and Lufthansa.
"All airlines are thinking of replacing their age-old systems. They are all thinking digital. The airline connects, engages, converses and serves customers digitally. This is easily said, but quite a bit of work happening there," said Mathews.
Digital, critical for recovery
The businessman listed out three major trends that will dominate the way airlines use technology to engage with customers.
"One is personalisation. You have to know your customer and sell what he or she wants. And not what you have," says the IBS Chairman. Second, airlines will want to take their products directly to customers, bypassing travel agencies.
Third, is virtualisation. "Now if you have the connection and you know the customer, you will be able to aggregate travel services from different suppliers, personalise them and deliver digitally," said Mathews. Central to this, he added, is the role played by technology.
Digitisation will ensure seamless movement at airports, touch-less bookings and check-in and encompass all standard operating procedures of airlines. The procedures will include that take care of passenger reservation, airport management, flight operations, crew operations, disruption management and loyalty management.
The focus on digitisation has meant that airlines continue to invest in technology, despite the pandemic, says Mathews. He underlined that IBS has "done much better, compared to the rest of the industry. And even in these days, we are operating cash profit."
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