by Riccardo Coli – International Client Director | Kilpatrick Aviation
Impacts and Lessons of an Unprecedented Scenario
The aviation industry has been hit very hard by the Covid-19 pandemic, perhaps even harder than 9/11 and the 2008 global financial crisis put together. The current setback began with the travel restrictions, collapse in demand among travelers, and closure of airports.
Airlines had to ground their fleets with only activity being cargo operations transporting supplies and repatriation flights for citizens.
Aviation Leaders RoundTable
As part of this exclusive roundtable for Kilpatrick Aviation, industry experts discuss the impacts of COVID-19 from different industry sectors and perspectives:
Enzo Zangrilli, Senior Consultant at 1Aviation, with more than 20 years of experience in Traffic and Routes Development strategies for regional, medium’ sized and primary Airports and Airlines; support and lead externally the Teams in charge of submitting applications for Ground Handling licenses in licenses-restricted Airports; Subject Matter Expert in Procurement and Cost down activities.
Burak Arkun, CFO and Board Member at Tailwind Airlines, founded in 2006, is a respected and trusted airline within the Turkish civil aviation industry and provides cost-efficient and quality service since its first flight in May 2009.
Mandeep Sandhu, Founder, and CEO of AirLuxxis Aviation Services, a leading boutique charter specialist firm focused on providing luxurious and bespoke charter services to clients globally.
How has the outbreak impacted your operations?
Enzo: To try and identify the Aviation picture in 2020 I would use the expression “Tabula Rasa”. Operations of the entire totality of Commercial Airlines (excluding the Cargo Business) have gone into a standstill mode now for some weeks. The average drop of operations in the first full-blown week of the pandemic was equal to 92% in the world. Unprecedented, never seen, not even after 9/11.
Burak: We are unable to carry our passengers due to flight restrictions. We kept our operation alive by operating cargo flights via our passenger aircraft and we are actively taking part in various evacuation flights.
Mandeep: The COVID-19 outbreak did not have much impact on our daily operations, simply because all our colleagues had tools that enabled them to continue to work from the safe confines of their homes. So, we were able to switch to the WFH concept quickly. However, we did lose all projects which were due between Mar-June 2020, future sales got impacted severely and the extended lockdown ensured that our cash flows also started to dwindle. So overall, yes, the impact has been severe
What is being done in order to ensure the continuation of essential services?
Enzo: Many Airports have and still are closed. Others have maintained Operations to a minimum, concentrating them in specific Terminals or Terminal areas. Airlines, in the vast majority have kept critical people at Ground Ops level and a minimal part of the Executive Management and laid off or entered in redundancy programs and parked fleets in convenient Airports, entering special contractual arrangements. Let’s say that for both we are looking at a “dormant” situation, ready to restart in 48 to 72 hours. It will be a progressive re-start though. First Primary and feeding Airports to Hub, then main point to point destinations.
Burak: We asked all our employees to work from home. We are holding our meetings online. To ensure a healthy environment on evacuation flights, our supply chain supplied the highest quality hygiene and cleaning materials, products such as disinfectants, masks, etc. We continued to invest in ICT.
Mandeep: Well, our teams have been staying in touch with our customers (existing and prospective) and partners through various channels of communication and supporting the one-off requests that we received for moving essential cargo domestically. We anticipated travel will not be the same, post-COVID scenario. We will have to live with a new normal for a foreseeable time. To stay on course under these dynamic circumstances, we identify some measures and strategies that will help us stay the course and hopefully come out of it in a relatively short time
Do you think the aviation industry’s response was quick and efficient enough?
Enzo: The response to the pandemic was quick. Aviation as we know it was shut down in 24 to 48 hours in the different parts of the world where the spread of the virus was declared. If we are talking about the preparedness of the industry as a whole, clearly Aviation was not ready, but then again, I can’t think of a single industry with an established process and “what if” flow charts in case of a pandemic of these dimensions.
Burak: Aviation employees are people constantly trained to make a calm and accurate decision mainly on the sudden changes and circumstances in flights and operations, with a reflection of this I think the industry is developing a response to the crisis very quickly and primarily to ensure safety.
Mandeep: Certainly, the response was very quick, and the aviation industry adapted and reorganized itself to continue operations despite the COVID restrictions and concerns. What we did as an industry was great and I believe it could have been even more efficient had some of the governments taken into account our enormous strength as an industry. To elucidate, when some countries stopped flights completely and abruptly, they failed to recognize how the same aircraft could have been utilized for cargo, repatriation missions, etc. Only after a few days/weeks that some countries realized the utility of say airlines and asked for supporting essential cargo missions of the governments.
Do you think the current crisis can be used as a catalyst to rethink how work is done and to accelerate the adoption of new capabilities?
Enzo: Agree of course and at many levels of each organization: from Operations, to HR to P2P systems, moving to Customer experience and ancillary sales platform. It doesn’t mean to go into expensive agreements with Digital Platform designers. It means above all to ideally segregate the various functions of any given organization and, maintaining the obvious inputs and outputs links to each other, asking yourself the question of whether each function can benefit from more automation and digitization, to prevent loops and adopt solutions in case of similar crisis again. But, ultimately, with the aim to become more agile and save costs.
Burak: Agree. Digital Transformation is a process that requires a specific investment budget, time, and effort. The managers, decision-makers who have been postponing digital transformation have no more excuse now.
Mandeep: Yes absolutely. The first step will be to see if the business continuity plans of corporations/businesses did work and support them during these times? Were they really practical? Did they cover all scenarios such as including natural calamities etc? I believe it will be prudent to review these plans against how the companies were affected under these circumstances and draw some answers. The COVID scenario has also propped up some tough questions for business leaders and all have to extensively and objectively review these questions, find practical solutions and get their business ready to face the challenges of the new normal. This could be investing in new technologies, capabilities, and how we run our companies.
Leadership is to be redefined. What new skills are you looking for in the key people of your company?
Enzo: resilience, credibility, and integrity.
Burak: Different profiles:
– Disturbance handlers: those who find a way to solve problems.
– Negotiators: the market does not always offer you what you imagined.
– Motivators & kindness.
– Figureheads: we work for creating financial value.
Mandeep: I believe what we would be looking for is:
– Empathy: I personally believe a person who has empathy as one of his core skills, will always lead the crisis with maturity, compassion and calmness.
– Self-motivation: A person who is self-motivated can steer the company through any crisis. He/she would be able to take the stress and take informed decisions for the well-being of the company and its employees.
– Agility and Adaptability: A person who is agile in his/her thoughts can adapt to any situation that is not normal, is complex and uncertain.
– Common sense: given the circumstances, it becomes more and more important to have and use common sense.
– Networking: a well-networked person can become a mover and shaker in a crisis situation.
– Ability to lead from the front: military-style leadership – be more on the ground and not just sit behind a desk/office.
What’s the industry’s main challenge for the next 2 – 3 years?
Enzo: Stimulate traffic development, no matter what. The Industry (particularly at Airports and Airlines level, needs to leave the traditional level of negotiating Route and Traffic development Business, generally conducted in an “adversarial, arm’s length” fashion, and move to a cooperating module. Risks and Investments opportunities need sharing and rewards too.
Burak: Fleet sizes will be reduced because of fewer expectations. Private aviation companies will seek to get aids from the state. Those who will stay alive will face a quick return in demand starting next year. Industry studies must be conducted via experts of the health industry to transparently eliminate the perception that travel with the airlines is not healthy (reputation).
Mandeep: I think the first biggest challenge would be to figure out cash at least in the short term. As some airlines are nearly bankrupt, some companies on the brink of closure, etc., employees losing their jobs each day, some liquidity in any form will be helpful. This will help retain what we have, spur recovery, and kick start growth, at the same time.
Additionally, our collective efforts should be to ensure people who travel are safe and all aspects of hygiene and safety are well-taken care. This will help in gaining people’s trust and hopefully they will travel more.
Thank you to our roundtable participants for joining us and sharing their significant contributions.
Riccardo Coli – International Client Director | Kilpatrick Aviation