Fright, Fightor Flight?

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By Munira Fidai

For all the death, trauma and loss that Covid-19 has left in its wake, it has also shown a harsh mirror to the residents of the world, making all its failures and ugliness plain for everyone to see. We saw humanity join hands; we saw it fall apart too. We saw people risking lives to help the disadvantaged and we also heard cases where the plasma was being sold to the highest bidder. We saw seemingly well off countries losing the healthcare battle and yet bigger countries bringing the pandemic on themselves due to a collective lack of health and safety compliance. Corrupt governments, weak governments, overconfident governments and governments in denial have all suffered as they have had their healthcare systems exposed and economies stripped bare. Out of most of the economy that has suffered in the hands of this vicious pandemic, few sectors have suffered as much as the tourism and aviation industry.

Who would have thought that there would come a time when seemingly free people around the world would become housebound like this? Not only is each country following a strict lockdown protocol, but most people who are not in countries that are implementing a lockdown are also scared of travelling to highly infected areas. They are mistrustful of other countries and are worried they may get stuck there if restrictions are heightened. Because the demand for air travel is falling, fewer planes want to fly. Aeroplanes that are flying are taking in fewer passengers in order to respect the norms of social distancing. And that is hiking up costs for flights. Many airports are closed and the aviation industry is watching in despair as summer, the ripest season for tourism quickly slips away. For now, airline companies are offering cheap prices for travel, still in the hopes of recovering losses with sheer volume. However, if the way things are going is anything to go by, those volumes will not come and flights per person will most likely become more expensive, as airlines shift some burden of the losses on to passengers. Revenues have fallen by 50% in 2019 only, and in 2020, the global aviation industry is estimated to lose $37.54 per passenger. Counting by 2.2 billion passengers globally, every day of 2020 will add $230 million to their losses. Altogether, the industry is set to look at losses worth $84.3 billion.

The government of Bangladesh extended its budget for Biman Bangladesh this time around by a few hundred crores and invested in newer, more money-making routes for the country’s national airline. The Civil Aviation Authority Bangladesh is also making moves to reopen entry to Bangladeshi citizens to the UAE, through the UAE Civil Aviation Authority and has meanwhile allowed Emirates to fly three times a week from its airports carrying transit passengers. The country has thus reopened air travel on the 16th of June on a limited scale. Measures are being taken to restart the aviation industry and get revenue rolling. Domestic flights have reopened earlier and tickets have become cheaper than before. It does not look like there are many takers, however.

Some airlines have found creative ways to cut their losses-by flying in medical supplies or by flying out stranded foreigners back home. Qatar Airlines was one such airline that has been operating despite COVID restrictions to Bangkok, Barcelona, Islamabad, Karachi, Lahore, Peshawar, Singapore and Vienna. By the end of June, Qatar aims to have 80 destinations including parts of hard hit Europe, destinations in the Middle East, Africa and the Asia Pacific.

Other airline companies like Vietnam Airlines have a completely different, almost a defiantly optimistic outlook. It is thinking of buying 50 new airplanes during this time to take advantage of the discounts and low prices owing to this recession. They feel that once this pandemic is over, they should be the first airline to take advantage of the spike in travel, rather than late responders. This includes all the other competitor airlines that had been threatening Vietnam Airlines before the pandemic. Vietnam Airlines has until now grounded 100 of its 103 airplanes since the Covid spread. Despite being one of the world’s fastest growing airlines in the world, Vietnam Airlines lost about $110 million in the first quarter of 2020 alone. It foresees a loss of about $843 million in this year. Vietnam Airlines CEO, Duong Tri Thanh feels that it may take up to 5 years for the aviation industry to pick up again.

Other airline owners are not as optimistic. South-East Asia’s biggest low-cost airline, the AirAsia Group is looking to reduce its workforce by 30% to cover losses. Tony Fernandes, founder of AirAsia is thinking of selling off a 10% share in the airline. They are, apparently, also thinking of slashing existing employee salaries by 75%. Not only this, Fernandes and co-founder Kamarudin Meranun have also agreed to not take any salaries home until the end of term. Employee fringe benefits like free and discounted flights and free meals have also had to go. Department budgets have been slashed and salary cuts are expected to go on until the end of 2021. No points for guessing, Fernandes does not see the situation improving well until 2022.

Sources have gone as far as to claim that AirAsia may be looking to sell its ventures in Japan and India. Other sources claim that the flailing airline may be looking for a merger option with other domestic airlines in order to survive the pandemic. In the meantime, the Malaysian government will be helping its three main airlines- AirAsia, Malindo and Malaysia Airlines as part of an economic rescue package.

In one of the more shocking pieces of news, Thai Airlines has filed for bankruptcy protection to rehabilitate its business. After showing losses from 2013, with the exception of 2016 where it showed a nominal profit, Thai Airways has finally succumbed to the interruptions due to Covid-19 and insurmountable debt.

Speaking of the bigwigs of the aviation industry, let us not forget Emirates. Despite being one of the costlier carriers, Emirates is also struggling with expenses due to the pandemic. At first, it was rumoured that Emirates Airlines was planning massive layoffs, numbers running up to about 30,000, reducing the number of its employees by 30%. Not long after, Emirates confirmed it by announcing job cuts in certain ranks of trainees in probation periods. The number of job cuts was not announced but about 600 people may have been let go. What is truly worrisome, however, is that Emirates indicated that more job cuts may follow. True to their words, Emirates announced its second wave of job cuts soon after, this time, a harsher one. About 600 pilots and 6500 cabin crew were let go. The airline has also announced 50% pay cuts until September in order to curtail costs associated with having to keep aeroplanes out of skies and other associated costs. The airline may continue to axe jobs in the near future if it finds it necessary to be able to keep the airline afloat financially. The airline has grounded its entire A380 fleet and has only a few of the Boeing 777s flying on an elemental map across the globe. Tim Clark, CEO of Emirates did not mince his words when it came to what he thought of the aviation industry and how long he feels it will be before it is back on its feet. In stark contrast to the bleak prediction of the Vietnam Airlines CEO, Clark predicts that 2021 will see the aviation industry return to normal again. He feels that while pay cuts and joblessness were serious problems, they would be momentary. People, he feels, are more anxious to get back to enjoying their lives after such a long and restrictive lockdown. He further states that the entire fleet might become operational in 2022. This seems to be a very hopeful lookout compared to a lot of other aviation gurus from different airlines.

A more hopeful view of the industry is that Bangladesh has already started lifting its restrictions after a 2-month long air ban. It is ready to resume international flights, including those through Qatar and the UK. Malaysian Airlines also plans to open its operations on a country by country and route by route basis. They plan to start flights to some countries sooner than to others and become fully operational by October. According to the Bangkok Post, Singapore Airlines is not planning to cut jobs for its staff yet. It has, however, offered its staff voluntary unpaid leave and some of the employees have taken up jobs outside the company after Singapore Airlines grounded most of its flights. While both Singapore Air and Silk Air have resumed some of their flights this month, it is still operating at only 6% of its capacity. Singapore Airlines have turned to pay cuts and bond sales to cover losses. It is also renegotiating with aircraft manufacturers to adjust delivery and pay schedules. The airline has shown its worst loss ever in the past three months.

There is no doubt that the corona pandemic has hit the world hard and economies are going to find it very difficult to regain their balance when all this blows over. What lies in the wake of the pandemic may, in many ways, be harder to bear than what is happening just now. This may be a very gloomy vision but a very realistic one. Due to the brakes on cargo planes in Bangladesh, the country was struggling to hold on to its vegetable and fruit export market in countries of Europe, UAE and even Canada. Neighbouring countries were reaping the fruits of our cargo stoppages. If the government had not intervened to provide chartered planes to restart the exports of these goods, the markets may have been lost. If this is just one industry, many other air export-based industries may already be shrivelling. In other news, Bangladesh has put a temporary brake on visas on arrival for all countries, barring investors and businessmen. This will affect industries like tourism and aviation visibly, and invisibly, many others.

Around the globe too, aircraft are not picking up calls from manufacturers who have their orders ready. The demand that was booming pre-COVID is simply not there and does not look to be as high, anywhere in the near future. Frustrated manufacturers like the furious CEO of Airbus threatened to sue airlines that did not honour their contracts due to the pandemic. Emirates Airlines may have put a temporary halt on the job cuts but only because it was rumoured that three of its ex-employees committed suicide due to the job cuts. The list of issues is long and difficult to read. An unnamed pilot who has long been in the industry has a lot to say about these trying times but not all of it is grim. “Globally, early retirement schemes are being offered to pilots so that they can take the lump sum and leave. It is becoming difficult to sustain senior pilots on their pay packages in these times. When the industry does pick up again, whenever that may be, the high cost of pilot training will deter companies from taking in too many new pilots. It remains to be seen how the aviation industry deals with these upheavals. Nobody has a plan yet.

In Bangladesh, the aviation industry is still quite small. And we are in the growth stage, we have not reached a saturation point yet. There is still a huge demand for the industry and therefore, within the industry. The government too is providing a lot of support to airlines. It is subsidizing charges relating to operating costs, parking fees, etc. It is pushing for a third terminal, and we know of many such projects that are going on. We also have a decent pool of young pilots that can cater to the demands of the industry when it regains the pace. The demand is already there, just hidden under the sheen of terror painted by the COVID virus. However, I am hopeful about September. We are seeing a rise in air travel from September, with Biman planning to expand to newer routes and our migrant workers creating consistent demand for private-sector travel. We are all ready, we are all preparing. We know we must be flexible so we are finding out new ways to adapt. We are trying to find cargo routes, charter flights and other money-making efforts to stay relevant. This says a lot about industry confidence. These are good signs. For now, we just have to hold our breaths, cross our fingers and hold on to hope. If we can somehow survive this pandemic, our sheer resilience and desire to succeed can take us far.”

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