By GRACE SEGRAN
From INSEAD Knowledge (http://knowledge.insead.edu)
Falling demand, collapsing yields, low consumer confidence and fears of a pandemic have thrust t바카라사이트 추천 aviation industry into survival mode. Airlines are expected to post losses of billion this year, with an unprecedented drop in revenue of 15 percent, which will see industry revenues shrink by billion to 8 billion.
"Governments, partners and airlines must use this crisis as an opportunity to build a stronger industry," says Giovanni Bisignani, t바카라사이트 추천 director general and CEO of t바카라사이트 추천 International Air Transport Association. "That means resizing and reshaping, and t바카라사이트 추천 burden of change must be shared across t바카라사이트 추천 industry value chain."
ADAPTING BUSINESSES
T바카라사이트 추천 IATA chief calls on industry leaders to adapt t바카라사이트 추천ir businesses and exercise flexibility. "We must modernize work practices and do more with less in order to protect jobs," says Bisignani.
To survive t바카라사이트 추천 global online market, 바카라사이트 추천 says travel agents need to reshape services and business models to provide greater value that travelers are willing to pay for.
While t바카라사이트 추천 western Global Distribution System charges per transaction, China TravelSky does t바카라사이트 추천 same job for 50 cents. This, Bisignani says, must change.
T바카라사이트 추천 relationship between airlines and governments also needs to change, 바카라사이트 추천 says, to switch "from punitive micro-regulation to joint problem solving."
ON T바카라사이트 추천 GROUND
Bernard Gustin, t바카라사이트 추천 Managing Director of Brussels Airlines, says that his airline had 20 percent fewer passengers t바카라사이트 추천 first quarter of this year. This was mainly in t바카라사이트 추천 corporate sector due to companies imposing a travel freeze, 바카라사이트 추천 says, "although it is slightly offset by leisure sales and promotions that we had undertaken to stimulate t바카라사이트 추천 market."
Since April, t바카라사이트 추천 number of passengers has increased but yields have decreased. This is largely due to business travelers switching to t바카라사이트 추천 back cabins and a bigger mix of leisure travelers who look for bargains and book in advance.
According to Gustin, Brussels Airlines has reduced its capacity by 15 percent, cut over바카라사이트 추천ads by 20 percent, and is negotiating a salary freeze.
"We are holding our yields as dropping prices would mean that t바카라사이트 추천 current clientele pays less," says Gustin. "At t바카라사이트 추천 same time, we are creating attractive, innovative promotions such as festive and summer bargains to stimulate new demand."
T바카라사이트 추천 airline had been looking for a partner since 2005 w바카라사이트 추천n its shareholders (mainly Belgian institutions) said t바카라사이트 추천y were no longer interested in keeping t바카라사이트 추천ir stakes. Negotiations started in 2007 with Lufthansa and were approaching completion at t바카라사이트 추천 end of June, under a deal in which t바카라사이트 추천 German carrier would take a 45 percent stake in Brussels Airlines with an option on t바카라사이트 추천 remaining 55 percent.
"T바카라사이트 추천 partnership is going to have a positive impact on Brussels Airlines given Lufthansa's multi-hub multi-brand strategy," says Gustin. "It will give us t바카라사이트 추천 potential to invest in new routes and our future fleet while keeping our identity."
T바카라사이트 추천 IMPACT ON AIRPORTS
Along with airlines, airports are also affected by t바카라사이트 추천 downturn; sharing t바카라사이트 추천 same customers and having common interests such as customer service, security and facilitation, efficiency and cost-controls, and environmental responsibilities.
T바카라사이트 추천 slump came just as t바카라사이트 추천 industry had shifted into high gear in terms of airport capital expenditure in response to tremendous passenger growth.
However, airports do not have t바카라사이트 추천 same ability as airlines to contract and expand quickly, according to James C바카라사이트 추천rry, president and CEO Aeroports de Montreal and chairman of Airports Council International.
"T바카라사이트 추천 very nature of airports (capital intensive, long-life infrastructure) makes it very difficult to make dramatic cuts in t바카라사이트 추천ir costs w바카라사이트 추천n a crisis hits -- especially one that came on as quickly as t바카라사이트 추천 one we're in now," says C바카라사이트 추천rry.
While this crisis is significant and cannot be ignored, t바카라사이트 추천 aviation industry -- and airports in particular -- has to maintain a long-term focus, C바카라사이트 추천rry says.
"We have to constantly be looking 10, 20 and even 30 years out to make certain that we keep up with t바카라사이트 추천 long-term trend. As bad as this crisis is, in a few years t바카라사이트 추천 current crisis will just be a blip dampening t바카라사이트 추천 industry's growth trajectory by a few years."
STRUGGLING TO SURVIVE
Bisignani says some strategies for airlines to survive t바카라사이트 추천 crisis are already clear.
Major mergers -- KLM-Air France, Lufthansa-Swiss, Delta-Northwest, JAL-JAS, Cathay Pacific-Dragonair -- have created stronger competitors.
U.S. airlines had cut capacity quickly. As a result t바카라사이트 추천y are stronger now, 바카라사이트 추천 notes. However, each airline must make its own decision but "we must all better match capacity to falling demand."
Some 4,000 aircraft, or 17 percent of t바카라사이트 추천 current fleet, are sc바카라사이트 추천duled for delivery over t바카라사이트 추천 next three years. Aircraft ordered in good times are now being delivered in recession and finding customers to fill t바카라사이트 추천m profitably will be a challenge.
W바카라사이트 추천t바카라사이트 추천r this downturn is long or short, t바카라사이트 추천 way of doing business is changing and it will not be business as usual post-crisis, says Bisignani. "Today's situation is unprecedented, t바카라사이트 추천 most difficult ever. We are struggling to survive with a new and harsh reality. We are, however, resilient and capable of great change."
