The chaos in the global and domestic travel sectors that is generating so much angst, anger and vilification of airlines and airports and their executives needs to be put in perspective. The only surprise within the current state of affairs is that it isn’t worse.
When the pandemic struck in early 2020 it would have spelled the death knell for the industry had it not been for large-scale government assistance for virtually all the world’s major airlines and speedy and drastic responses by the airlines themselves.
Qantas boss Alan Joyce and his peers have come in for heavy criticism since the start of the pandemic, but their hands were tied. Credit:Kate Geraghty
With international borders shut and rolling lockdowns of internal borders, international travel effectively ended in an instant and domestic travel volumes evaporated amid rolling uncertainty over if and when internal borders might open or close.
There were massive worldwide waves of redundancies in the sector as the revenue bases of airlines and airports evaporated and torrents of red ink were generated as the industry tried to retain a core of its people and capabilities even as their income shrivelled.
Globally, airlines have lost more than $US200 billion ($290 billion) since the emergence of COVID and are still losing money today.
Qantas, despite receiving about $1.6 billion of government assistance (some of it for continuing to fly routes at the government’s behest that it would not otherwise have flown) has reported statutory losses of about $5 billion at the pre-tax level so far and will report another significant loss for the year to June.
In the circumstances, there was no alternative to the drastic actions the airlines and airports were forced to take.
The legacies of that worst period of the pandemic, and the several false dawns that occurred in some the countries, like Australia, with a conservative approach to COVID before the sector started to properly re-open for business, are very evident today.
Extraordinarily lengthy queues at airports and at immigration and customers desks, frequent delays or cancellations of flights, often at the last minute, lost baggage and now-soaring fares aren’t confined to Qantas, or Virgin but are the norm globally.
Airports are responding by capping passenger numbers and asking airlines to limit their ticket sales. London’s Heathrow ignited controversy this month when it limited passenger numbers to 100,000 a day and ordered airlines to stop-selling tickets until mid-August. London’s second international airport, Gatwick, and the Amsterdam’s Schipol, have taken similar action.
The pandemic saw the global travel industry grind to a virtual standstill, heaping pressure on airlines around the world. Credit:AP
Airlines, which poured capacity back into the market as demand returned at a surprising pace, are now taking capacity out to bring their operations into line with their current capabilities. British Airways has announced plans to cut 10,000 flights between now and the end of October. Qantas and Virgin, along with numerous European and North American carriers, are also reducing capacity.
The core of the problem the entire sector is having is people, or rather the lack of them.
Several million people (there are estimates of about 2.5 million) from baggage handlers to pilots, were made redundant during the pandemic – Qantas shed the best part of 10,000 employees – as the airlines and their service industries scrambled to conserve cash.
The extent of the rebound in demand for travel and the abruptness with which that demand has returned has out-paced the ability of the sector to respond.
Many of those who were retrenched have found new employment or are wary of returning to an industry that still operates with the cloud of the pandemic hanging overt it – the sector is only a new, more lethal strain of the virus away from another shutdown – and recruiting, training and gaining security clearances for new employees amid worldwide competition for experienced staff takes time.
Schedules are also being disrupted by COVID-related absenteeism, which exacerbates the effects of the underlying insufficiency of the workforce for the passenger volumes being experienced.
The strains on capacity are most intense at the airports, which seem to have been even less prepared than the airlines for the rate at which travel has resumed and are having greater difficulty in attracting people to provide the base infrastructure and services the airlines require.
Low pay rates, 24-hour rosters, physically demanding work and the need to be physically on site aren’t that appealing in an environment where many workers are now able to spend at least part of their week working from home.
Airports globally are struggling to cope with demand as the world starts to travel.Credit:Oscar Colman
Some airports, and airlines, are now offering “golden hellos” of several thousand dollars to entice prospective employees to sign up while paying retention bonuses to existing workers to ensure they remain.
At the same time there is increasing worker unrest, with unions in Europe – and Australia – threatening industrial action if they aren’t given more reward for jobs that have become more demanding after experiencing more than two years of job losses and pay freezes.
Aviation is an enormous, complex and fragile ecosystem with myriad interdependencies, almost all of which are under acute pressure.
Compounding the challenges for the airlines – which have massive operational leverage, in both directions – as they seek to emerge from this period of post-pandemic chaos and regain operational stability is the soaring price of jet fuel.
Globally, airlines have lost more than $US200 billion since the emergence of COVID and are still losing money today.
The surge in oil prices as the world recovered from the worst of the pandemic has been exacerbated by Russia’s invasion of Ukraine and the efforts by the West to choke the oil revenues of the world’s third-largest producer.
The jet fuel price is now, according to the International Air Transport Association, 85.7 per cent higher than it was a year ago. That is now flowing through to fares, adding to the discontent among passengers who are being asked to pay a lot more for an uncomfortable and unreliable experience.
None of the issues confronting the sector can be resolved easily or quickly. Over time, if the pandemic is accommodating, they will be resolved as airports and airlines that are racing to overcome the bottlenecks in their operations gradually rebuild their capabilities.
The global nature of the challenges and the reality that the pandemic, its impacts and the responses of governments and other authorities couldn’t have been foreseen underscores how misguided the sometimes vicious criticism of the businesses and their executives – Qantas’ Alan Joyce has been a particular target in this market – might be.
The pandemic disrupted most things and most businesses and continues to do so even as most major economies (other than China) are now in the “living with COVID” phase. Aviation was – and will remain for quite some time – more disrupted than most.
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