The Post-COVID-19 Recovery Plan for Airlines

It is no surprise that the industry that suffered hardest by the COVID-19

pandemic is the one responsible for helping spread it to the four corners of the
Earth. You can combine the 9/11 attacks along with the 2008 global financial
crisis but it will not beat the current situation.

According to the article published by BCG, the airline industry across the globe
should devise a plan that will lead their path to recovery.

The duration of the crisis is the question of how quickly—and to what extent—
air travel demand will recover. However, forecasts for the current crisis
indicate that the duration and impact will be much more severe than any
we’ve seen before. In mid-March, the International Air Transport Association
(IATA) forecast a loss of $252 billion in revenue—44% of 2019 revenue. Also,
health concerns might initially curb passengers’ inclination to fly.
According to the BCG analysis in the report, potential market structure
scenarios can be the one in which support for aviation domain employees is
provided which could play well in Europe and Asia. But if the crisis continues,
the industry regresses with a drastic reduction in the number of airlines,
leaving a handful of national carriers (with government ownership) and only
the strongest LCCs.

As per the latest assessment report on COVID-19 impact, IATA updated on 14 th

of April, 2020. It says the worldwide industry shows 80% reduction by early
April. A deeper recession is now expected in 2020 as Economists’ revised
forecasts expect output loss twice as large as the global financial crisis. Experts
have also suggested that domestic markets open in Q3 but international will be
slower to open.

IndiGo’s road to recovery

The government has increased the lockdown by 20 days which means zero
revenues with fixed costs like salary and lease rentals. According to a plan
shared, the airline will gradually increase capacity in the following months and
re-start international routes, depending on government restrictions. As stated
 by the CEO of IndiGo Mr Ronojoy Dutta, “We will begin domestic operations
only on May 4. At present, our singular focus will be preserving the health of
our customers and employees”.

The airline will also follow strict zonal boarding process to prevent grouping of
passengers at the same time. DGCA suggested a set of protocols to ensure that
distancing is measured in confined places like aircraft and airport once air
services resume. The steps include measures by keeping the middle seat and
the last three rows empty. This will decrease the capacity of an aircraft
significantly.

IndiGo has decided to disinfect aircraft after every arrival and deep-clean
planes every night this procedure of disinfection after arrival will increase
turnaround time and the airline will have to reduce the number of flights
significantly to maintain operations on time.
The airline has shifted its entire training system online, including ongoing
training at its academy – Ifly. All cabin crew and airport operations team are
being trained through a pictorial online programme. Lead cabin attendants are
undergoing telephonic announcement training through videoconferencing app
Zoom.

IndiGo and SpiceJet have also decided to fill its airport buses at 50 per cent
capacity when services resume. IndiGo will also discontinue onboard meal
services.

The generic action plan could be :

 They should start by determining the optimal size and dimensions of

their networks and fleet with the help of digital support tools to determine the
routes that are most likely to recover—based on several demands and market
structure scenarios and while optimizing for free cash flow.

 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—including process redesign, organization size, and structure This work
will add value that will remain well after the crisis is over.
 Airlines should also prepare for ramping up, once airports and countries
reopen in case they have done the rampdown like in British Airways.
 Finally, of course, finance teams will need to be closely involved to
protect cash levels, capture revenues as soon as possible, and delay cash-outs
as much as possible.

References
https://www.bcg.com/publications/2020/post-covid-airline-industry-
strategy.aspx
https://www.iata.org/en/iata-repository/publications/economic-reports/
covid-fourth-impact-assessment/