Business Aviation
Article | December 28, 2021
The unprecedented wave of Covid 19 created significant turbulence in the aviation industry that made the industry face daunting new challenges. However, as airlines continue to respond to the challenges, the marketers remain focused on paving the way for quick recovery.
Whereas, aviation experts admitted that this black swan event impacted the airline industry roughly. The impact of COVID-19 on airlines was forced to face bankruptcy, destruction of financial packages, and complete changes in the airline industry in terms of security. Therefore, while keeping the fact that COVID-19 will have longer-term repercussions, it’s imperative the airline industry would quickly reduce the impact on its stakeholders and operations. And for this, airlines need to go beyond conventional thinking and come forward in using technology to dig in for the long haul.
Airline Industry: Riddled with Challenges Amid COVID-19
Given the airline market behavior during the Covid-19 crisis, it has many opportunities to target different marketing segments through direct and indirect channels. However, some complexities that challenged building an effective marketing strategy were:
Drop-in Revenues
According to KPMG, commercial revenue has been a rich source of income in airline businesses; it contributed more than 50% of inclusive revenues in the airline industry. However, a large share of revenue is generated by marketing which has completely dried up with minimum footfalls. Reduced economic growth, absence of remote work arrangements, and loss of operational models have been some of the fallen parts of the airline industry to deal with this new reality.
IATA, at first, stated that airline revenues could fall by $314 billion in 2020 owing to COVID-19, which is a fall of 55% compared to 2019. However, further analysis revealed that it fell $419 billion more in the same year. Also, the second quarter of 2020 saw a nearby decline to $43.5 billion in revenues compared to the projected baseline, a reduction of more than 1%.
Impact on Future Investments
The impact of COVID-19 on airlines was much on the plan for future investments and asset building. These areas posed significant challenges for airline businesses and investors to monetize assets or repurpose them to create shareholder value. In other ways, competition from newer asset-light businesses also posed an additional challenge on asset building and profitability.
How has Airline Industry Retorted to the Pandemic?
Most businesses have reduced all new investments, freezing shares, maintenance, and partnership costs. These have been the extreme response expected in the war—COVID-19, which is even gimmer than war.
But, despite all the impact of COVID-19 on airlines, airlines have responded with alacrity. The crisis made them stand by quickly developing new business processes and operations, research models. In a longer time, changes in the airline industry weren’t so significant. Airlines are also witnessing a radical shift in their development priorities and unique opportunities to conduct research. The desire to provide additional pressure on revenue management systems to predict demand more accurately has also been the core force of development. Let’s understand more under the following points:
Technology Makeover
In a progressively evolving digital-only landscape, the technology carries more value if used well. Investing in the right tools and technology can help monetize assets better and significantly improve operating efficiency and customer experience.
Refocus on Cost-line
Innovations in marketing strategies, technology can suggestively change the cost of providing services for both airlines and airports. It can help give more pressure on both affordability and profitability. This area of transformation can stimulate significant savings in operating costs and could become the norm for the best performance of marketing.
Innovate
COVID-19 has spawned the best inventions and innovations. The value of data and technology that you have access to today cannot be overstated. Yet, the aviation industry has shown the resilience to come back stronger and smarter. Therefore, there is a necessity for a thoughtful, analytical, and consistent approach to reforms to help the industry function at a newer and higher altitude and redefine its new normal. The changing geopolitical marketing scenario and impending operational shifts globally demand a swift and nimble approach. Advantageous changes in airline industrial policy in COVID-19 will be required to feat the opportunity, with accrete marketing strategic gains and create a better future.
In a nutshell, airlines had to reinvent how they looked at bookings, employee management, and revenue management, as the previous curves were no longer relevant, and the training data used for machine learning algorithms were no longer valid. Now, airline businesses are exploring novel ways to shorten the old methods used in forecasting, pick up on trends more quickly, and incorporate demand adjustments made by manual revenue management users.
Finally, the writing is evident on the wall—as airline stocks continue to falter (by 16 to 20%), the industry needs to go beyond conventional thinking and use technology to dig in for the long haul.
Airline Marketing: Path to Recovery with 3 Important Tech-Strategies
Inclusion of Advanced Analytics
In the next five years, airline businesses will proceed to develop their ability to install advanced analytics. Although the industry has been using advanced data and analytics, there are expectations that marketing leaders will expand the entire value chain of analytics more progressively. Data-backed analytics will render insights to pinpoint geo-specific interventions for maximum ROI.
While traditional sources of competitive advantage for airlines such as products, networks, technology will continue to gain importance, it is believed that increased usage of data science and advanced analytics will help the industry to augment these sources to deliver notable performance improvement.
Rapid Adoption of Data Science
The aviation industry is part of the change, too, in terms of technology development. Airline Technologies in Covid is radically varying the way businesses connect with their customers. The data required is allowing businesses to take informed steps towards operational efficiency. While embracing new technologies, changes in the airline industry are witnessing the addition of artificial intelligence (AI) to the maximum so that businesses can operate in the post-COVID-19 scenario.
Control of Digital Solutions
As airline market behavior during the Covid-19 crisis has incurred changes in the airline industry, the control of digital solutions has come to the rescue. The solutions are in need to shift resources and efficiently scale to maintain operations. Digital tools can help with a wide range of business efficiency, sales and revenue management, marketing, and network planning.
Opportunities to Reimagine in Post COVID-19 Era
Here are the significant ways in which it could be done.
Operating Model
Airlines today need a data-driven operating model with a mindset that pushes accountability across each touchpoint in the business journey. Marketing teams should be organized around journey stages keeping technological aspects on board. The operating model should be accompanied by KPIs that should be measured across the customer journey and regularly shared with every team member.
Digital Transformation
The airline industry could consider stepping up IT, digital, and automation investment now. The crucial strategies for digital transformation are driving data-driven platforms and personalization. Tracking business interaction at every touchpoint with the brands and their products enables better predictive analytics. This means integrating digital solutions with enterprise systems and making the data available at the point-of-sale for sales associates to view, interpret and recommend products accordingly will enhance the convenience of operations. In the case of point, airlines businesses can respond to the faster recovery of short-haul flights by investing in direct sales, owning the customer relationship.
Also, relationships with IT and its providers could be re-considered and explore from a technologically perspective. Beyond this, other initiatives which involve efforts like using data in smarter ways to enhance decision making, requiring some investment to yield significant payoffs, are in the line of digital investments.
Virtual Reality
Gone are the days with COVID-19, when customers were physically involved in the airline business and running it successfully. Unfortunately, the panic of the pandemic is here to stay as a part of our life. So, companies will need to think out of the box. Several tools are available in the market today to avoid physical interactions. Brands have introduced their own ‘Virtual test and try’ tools for marketing and sales purposes.
For instance, Guerlain invested in gamification and launched a mobile game called ‘WeChat’ to promote its sales deck. Similarly, to enhance the operational desk, Lancôme introduced ‘Virtual Mirror’ - an augmented reality virtual makeover app.12 ‘Modiface’- a Canadian AR and AI company, was purchased. Its product performs virtual try-on simulations and is enabled to support live video for all airline operations.
So, the crisis and issues the airline industry facing in the Covid‑19 on revenue generation will still be intensely felt in 2021-2022, as it was earlier. But it is expected that the coming quarter of 2021 will show improvements compared to the previous. This means the industry, which was moving from a decline of 7% in the first quarter of 2021, will see a decline of 35.2% in the fourth quarter compared to the projected baseline.
How to Plan a Marketing Strategy for your Airline Company?
Being in the market already, you can understand where the roots of a marketing campaign come from. Nearly all the airline businesses arise their marketing activities from their vital target group or according to the demand to promote a new product.
There is no solitary way to create a marketing campaign because it involves many company-specific details. Here, you will need to understand how you can stay ahead of your competitors in the marketing field to yield revenue.
Here is a brief sum-up of some valuable points that can help you.
Stick with your Customer Segment: Business or corporate travelers differ in their travel behavior and priorities. So, while you run a marketing campaign, it should highlight this factor as a prime concern.
Focus on the Product you will Market: This point covers that you need to consider that all the product dimensions (digital, physical, service) to market should consider on parameters like how do you want it to market, what are your secondary aims, and how can you benefit from customer actions.
Foster Interaction: So, try to keep as much interaction with your customers as possible. It does help to build loyalty, establish relations with your brand, and source valuable data about your customers. By doing this, you will be able to create a personalized experience for them in the future.
Be loyal: As long as you are not an ultra-low-cost airline operator, you will perhaps have to reward the loyalty your frequent customers give you. Special offers, discounts, and loyalty programs make your brand a company to stick with forever.
Keep an Eye on Competitors: As the airline market has high competition and competitors, your team creating a marketing strategy must include two key elements: your market position and your competitors.
And the last, you must maintain a balance between competition and customer loyalty at any cost.
Frequently Asked Questions
What are the top three issues the airline industry is facing in the Covid‑19?
Although the airline industry faced several challenges, the worse challenges were:
Sluggishness in travel/travel bans
Loss of revenue
Data loss
Which airlines have been most affected by coronavirus?
The list of airlines worst affected by covid-19 goes as:
China Southern
Hainan Airlines
Singapore airlines
Japan airlines
Korean Air & Asiana
Middle Asia
British Airways
United Airlines
What is the future of the aviation industry after covid-19?
From the perspective of the COVID-19 scenario, the aviation industry needs to pick itself up and begin rebuilding. From hygiene and health standards to aircraft data management to monitor an aircraft’s components and onboard equipment can transform airline operations.
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Business Aviation
Article | January 28, 2022
A New System That Aims to Create Carbon-Neutral Aviation
Scientists have achieved an amazing breakthrough in the development of carbon-neutral fuel for the aviation industry. An aviation fuel production system that uses water, sunlight, and carbon dioxide has been put into action. Its design was published on July 20th, 2022, in the journal Joule. The dream of achieving carbon-free aviation could become a reality with this development.
“We are the first to demonstrate the entire thermochemical process chain from water and CO2 to kerosene in a fully-integrated solar tower system.” - Aldo Steinfeld, Professor, Study Corresponding Author, ETH Zurich
The aviation industry accounts for approximately 5% of the global anthropogenic emissions that contribute to global climate change. The industry heavily relies on kerosene, commonly known as jet fuel, a liquid hydrocarbon fuel derived from crude oil. There are no clean options to power commercial flights on a global scale at the moment.
Production of Synthetic Kerosene
This breakthrough, with the help of solar energy, makes it possible to produce synthetic kerosene from water and carbon dioxide instead of crude oil. The amount of CO2 emitted during kerosene combustion in a jet engine equals what is consumed during its production in the solar plant. It is what makes the fuel carbon neutral, especially if the CO2 in the air is captured and directly used as an ingredient, which could be possible in the near future.
As part of the European Union's SUN-to-LIQUID project, Steinfeld and his colleagues put forward a system that uses solar power to generate drop-in fuels—synthetic alternatives to fossil-derived fuels like kerosene and diesel. Solar-produced kerosene is consistent with the current aviation infrastructure for allocation, fuel storage, and use in jet engines. It can also combine with fossil-derived kerosene, according to Steinfeld.
High Hopes for the Future
Steinfeld and his team began scaling the construction of a solar fuel manufacturing plant at the IMDEA Energy Institute in Spain half a decade ago. The plant has 169 sun-tracking reflective panels that redirect and concentrate solar radiation into a tower-mounted solar reactor. This concentrated solar energy then powers redox reaction cycles in the reactor’s porous ceria structure, which is not absorbed but can be reused. It transforms the water and carbon dioxide into syngas, a customized mixture of hydrogen and carbon monoxide. This syngas is then injected into a gas-to-liquid converter and is finally converted into liquid hydrocarbon fuels such as kerosene and diesel. Steinfeld and his team are working on amping up the reactor’s efficiency from the current 4% to more than 15%.
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Aviation Technology
Article | June 2, 2022
There’s been a lot of talk lately about airlines around the world beginning to favor smaller aircraft. Not just amid the pandemic but for the foreseeable future as well. The debate was given fuel when Lufthansa’s CEO made comments about potential down-gauging of its fleet ahead. But have we really entered the era of smaller airplanes for good?
Many have argued that even when demand for air travel does return there will be less of it overall because of a precipitous and permanent drop in business travel. And beyond that, even where demand does exist, it will be for convenient, point-to-point service, not on A380s via big hubs – as smaller planes emerge that are capable of flying farther and people shy away from big, crowded airports and the hassle of connecting. All of which calls for smaller planes. I’ve argued recently that this seems a little hasty. Nevertheless, the jury is out, and as they say – only time will tell.
Have smaller planes taken over flying?
One thing we can look at is whether the notion that smaller planes rule the day holds true at major airlines right now. And pulling some Flightradar24 data we can see that this has been happening – mostly. The headline takeaway seems to be that bigger planes do still have their place, but for obvious reasons smaller wide-bodies have proven more desirable on many global routes during the past year.
Lufthansa dropped its Very Large Aircraft quickly
If we look at Lufthansa’s data, the trend is very clear right from the beginning of the pandemic. The A380 and the 747s (both -400 and -8I) took a definitive hit beginning in March 2020. That was it for the A380 and the 747-400 for good, it seems. The small rebound in A380 flights recorded in recent months were storage-related. And since the pandemic started, it’s clear that the smaller A330 has been clearly favored, taking up nearly double the percentage of flying it had at Lufthansa pre-pandemic.
What’s most interesting here is that the 747-8I did come back, in some weeks to pre-pandemic levels. That’s quite a big plane. It is probably hard to fill these days. But it is Lufthansa’s flagship now – it has a First Class cabin and it can carry quite a bit of cargo. As a result it kept flying for a while on the bigger US routes like LAX. However recent dips in demand, and the winter season, saw the smaller and more fuel-efficient A350 come in to replace it on many routes. As I write this the Lufthansa 747-8I is in flight on just two routes – Mexico City (MEX) and Buenos Aires (EZE) to Frankfurt (FRA).
If I were to take a guess, I’d say we continue to see the 747-8I for some time on these bigger routes and in busier seasons. It may turn out to be one of the last options for passengers to fly a 747 a few years from now. Eventually, though, the more efficient 777X will replace it. Though Lufthansa has said it’s looking to shift to smaller airplanes overall, the 777X seems a natural fit for its big hub to hub routes. I don’t think we’ll see a day when the A350 is the largest plane in Lufthansa’s fleet – at least as long as Germany remains Europe’s largest economy.
Delta favors smaller, but only by a little bit
If we look at Delta, which also has a wide range of wide-bodies in its fleet, the picture is a little more complicated. In part that’s because initially its 777s and A350s (both of which fit about 300 seats) took over quite a lot of flying while its smaller 767s (200 to 240 seats or so) were more or less parked.
Since then, however, the 777 fleet has been retired and the 767s (both -300 and -400 series) have been doing nearly 60% of Delta’s wide-body flying. And its smallest Airbus wide-body, the A330-200, has flown much less throughout the pandemic. The A330-300, A330-900neo and A350-900 have filled in the rest of the flying, but while they were doing a majority of the wide-body flying in the first months, they’re not back to flying roughly the same percentage of Delta’s wide-body flights as before the pandemic.
It’s interesting to note that a number of 767s have been retired during this time, and A330-300s have been used to fill the gaps where necessary despite having a higher seat count. If no 767s had been retired it’s likely the total percentage of flights run with the 767 would be even higher.
What’s the bottom line?
It seems that airlines have tended to park their biggest planes, but perhaps not as drastically as some might have expected. That may have had a lot to do with cargo capacity. But cargo capacity will continue to be a consideration post-pandemic as well, so it’s not as if these planes will prove useless once things get back to normal. And if we see the boom in travel demand that some are predicting is on the way, many of these larger aircraft may see they get plenty of use yet.
Will there be less very large aircraft in airline fleets overall? Yes, probably. The A380 is all but done for except at a handful of airlines. And will smaller, long-range planes like the 787 prove popular in the years ahead? No doubt. But the bigger, fuel efficient planes like the 777X and A350-1000 will almost certainly still have their place in the sky too.
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Business Aviation
Article | May 12, 2021
Each year airlines begin new sustainability initiatives, experiment with biofuels, and offset their carbon emissions on selected flights; yet, sustainability should not only be a topic of discussion when an aircraft is in the air but also when it’s on the ground.
In just one year, a Boeing 777, 787, Airbus A330, and A350, burn an extra 265,000 litres of fuel due to the 1% increase in drag. As a result, a full year’s operations of such an aircraft costs US$77,600 more than during the previous year. A dirty aircraft exterior is full of microscopic patches of dust and mud that impact the airliner’s operational efficiency by creating turbulent airflow across the whole fuselage. While the problem of additional drag is not new, there are no solutions to combat it other than performing regular cleaning of the aircraft’s exterior.
Reducing drag – through cleaning – on aircraft fuselage, wings, engine cowlings, and stabilizer brings another challenge; how to remain sustainable while performing the exterior cleaning process? A popular, yet wasteful pressurized water cleaning technique requires more than 11,300 litres of water to clean one Airbus A380 aircraft and more than 9,500 litres to clean a Boeing 777. Traditionally, aircraft are cleaned four to five times per year, and with more than 48 thousand airframes in the world, the amount of water used each year is immense. As a result, the positives of clean fuselages are outweighed by the negatives of wasteful usage of expensive and environmentally important resources.
This raises a question: whether it is possible to be eco-friendly in the aviation industry when one solution brings even more challenges than benefits? While the answer may look complicated, the definite answer is yes. The use of robots in household applications has proven that robotification is an inevitable and much-needed process to achieve even more efficient operational performance.
One of the solutions to address the inefficient and time-consuming process of washing an aircraft fuselage is to employ an aircraft exterior cleaning robot. The market offerings like Nordic Dino, have been perfected and adapted to work with a wide range of aircraft fuselage types. Such robots are designed to minimize the use of water and detergent on every wash; saving more than 30% more water when compared to traditional washing methods. At the same time, built with sustainability in mind, the robots can be equipped with electric motors, further minimizing the environmental impact.
“Sustainability and eco-friendliness should not be viewed as challenges or impossible achievements in the aviation industry. By utilizing the right equipment, finding alternatives to polluting methods, and increasing efficiency at every step possible, companies could come one step closer to operational efficiency as well as sustainability targets. Our offering, Nordic Dino can reduce the use of water and detergent and can be powered by electricity, reducing carbon and nitrogen dioxide emissions. By the robotification of the cleaning process we present a solution to MROs and dedicated aircraft cleaning companies to become green.” – commented Jan Brunstedt, CEO of Aviator Robotics AB.
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