On 16th July 2020 hundreds of attendees gathered (virtually) for ‘New normal’ what about the new possible? This was our first webinar in a series of three, looking at the potential for aviation coming out of the Coronavirus pandemic, as well as its biggest challenges. Two subsequent webinars looked specifically at the airport and ATM perspectives.
Each was led by a top-notch panel of experts from industry associations, regulators, ANSPs, airlines, airports and suppliers – from Africa, the Middle East, Asia and Europe. Our sincere thanks to everyone who supported and took part. The events were framed by an industry survey, which captured experiences and expectations, hopes and fears resulting from the current crisis. We shared some key survey findings at the beginning of each webinar and supplemented them with a few audience polls during the events as well. You can find a link to the survey findings at the bottom of this article.
What did we learn? Confidence to transform
The first webinar looked at the big picture. Our esteemed panel from ICAO, ACI, IATA and CANSO were joined by Alan Corner, Strategy & Growth Director Aviation for Egis and Claire Davies, Egis Aviation UK CEO.
The panel reflected on the immediate response to the current crisis. Rafael Schvartzman, IATA RVP for Europe felt that overall, the industry as a whole has done a good job, observing that the ability of Europe to restart quickly was based on shared standards and established relationships. Worldwide, the situation is still fragmented, and that needs addressing.
However, looking ahead at what more we should be doing to better prepare for the future and the ‘new possible’, improved collaboration and the opportunity to ‘rethink’ aviation were key themes.
As expected, the priority for all survey respondents currently is cost cutting (52%) and revenue generation (43%) – with technological leadership and service scalability following close behind. The survey had already identified that cost-recovery models and charging mechanisms are viewed by all segments of aviation as the highest priority for revisiting in light of the pandemic. But beyond those, will vital state support be forthcoming to help fund recovery? ICAO’s Catalin Radu suggested that states should use aviation as a strategic tool to promote economic development, the implication being that they must then also invest in supporting aviation.
Olivier Jankovec, DG of ACI Europe observed that in airports the pandemic is accelerating trends that pre-existed, including fast-tracking digital uptake and acceptance – a journey that every airport was already on, but which has skyrocketed to the top of management agendas. However, funding remains an issue.
In our survey, we asked whether organisations outside the aviation industry could provide opportunities for collaboration to promote recovery and increase resilience to future shocks. All parts of the industry identified that the clearest opportunity lies with data suppliers. Other industries mentioned were telecoms, healthcare, rail and road transport. Indeed, Catalin Radu explained that ICAO is working with the World Health Organisation to put in place a public health approach for governments, so collaboration has begun between aviation and the healthcare sector.
Nearly half of respondents to the survey anticipate opportunities arising from collaboration with data suppliers, but the panel expressed concern at the lack of progress on data sharing – an essential component. Whether down to trust, competing priorities or culture, or indeed the sheer volume of data involved, progress is frustratingly slow. CANSO’s Simon Hocquard identified a role for regulators in this, suggesting that “the role of regulation should be to foster collaboration” but said that the word itself is “overused and underutilised”, preferring to say simply, ‘work together’.
However, the elephant in the room, as one panellist observed, was the future of sustainability. What capacity will the industry have to invest in climate initiatives going forwards? And if they don’t invest now when the industry is at a cross-roads, will a critical opportunity have been missed? This was an area of concern particularly from airports, and it was noted that there is a big gap between regions of the world in terms of the extent to which climate and sustainability is prioritised. In our survey, in the post-pandemic world, climate was priority #4 for European respondents, but slipped to 8th place for respondents in AsiaPac, dropping to bottom in other areas of the world.
The webinar concluded with two live audience polls. In the first we asked about the top opportunities coming out of the crisis for the aviation industry. The most popular answer from 29% of respondents ‘in the room’ was more focus on improving service scalability and resilience, with 23% voting for better collaboration within industry. In the second poll we asked what level of confidence people have in the ability of the aviation industry to transform – the responses were overwhelmingly positive, with only 1 in 5 respondents lack confidence. That’s a reassuring response that should give us all a boost of energy moving forwards.
Watch a recording of the full webinar here: https://register.gotowebinar.com/recording/2851098930304772107
What did we learn? The airport perspective
For our second webinar, Jacques Khoriaty Global Partnerships & Development Director, Egis and Nick Boud, Director Airport Consultancy, Egis, were joined on the panel by Jost Lammers, President of ACI Europe, Satyaki Raghunath, Chief Strategy & Development Officer for BIAL India, Sheikh Aimen Al Hosni, CEO of Oman Airports and Muhammad Awaluddin, President Director of PT Angkasa Pura II, Indonesia.
The panel began by summarising the current situation for them and how they had prepared for reopening. Jost Lammers of ACI Europe reported that airports have suffered >98% drop in passenger traffic in Europe, and that has slowly reduced as airports began to open. But most traffic happening today is within country or regional hops. Long haul traffic is still very difficult with load factors in his own airport (Munich) at just 30%.
Sheikh Aimen Al Hosni painted a similar picture for Oman, which has seen traffic down by 98% and remains in partial lockdown until early August.
Muhammad Awaluddin, joining from Jakarta reported a similar decline of 92-93%. In the nineteen airports for which he has responsibility they have developed a five-step protocol for COVID-19 and defined four different levels of operations, enabling them to allocate resources according to traffic movements.
Reporting from Bangalore, Satyaki Raghunath, said that his airport was in full lockdown from 23/24 March to 24 May, with just cargo flights operating. Their focus was on health and sanitation, getting PPE for staff, and using tech and communication to build confidence. Contactless travel is already possible from kerbside to boarding gate, but now they want to extend ‘contactless’ beyond passenger operations. Today they are running at 14% of normal daily passenger numbers. The situation is made more complex by different quarantine regulations existing in different Indian states, which has knocked confidence and increased uncertainty. Where people are flying, they are purchasing one-way tickets, not returns.
Our survey had identified cost cutting, revenue generation and sustainability as the top three priorities of airport respondents in light of the pandemic. The panel were asked about their strategic priorities going forwards.
Satyaki Raghunath said that he expected to continue with the planned commissioning of a new terminal at Bangaluru airport (BIAL), but that the commissioning date would likely drop back from March 2021 to April 2022. They have pulled back on other projects and are undertaking a major cost rationalisation exercise. Their focus now is on finding ways to use technology to improve the passenger experience, focus on health and sanitation, and increase revenues.
Muhammad Awaluddin explained that they had allocated 530m US$ for airport development this year but that figure has now dropped to 50m US$ – a decline of more than 90%. The previous portfolio of more than 250 projects has been rationalised to 89 projects. They are looking to collaborate with strategic partners and no longer 100% fund development projects, instead moving to a PPP model. For him, the lesson of this crisis is the need to share benefits, risks and learning points with partners outside of aviation.
For Oman, Sheikh Aimen Al Hosni reported that the pandemic had accelerated their tech plans by 10-15 years. “Passengers want everything automated. We are in the middle with mixed feelings, bombarded with regulators and airlines requirements, but the One ID process envisioned by ACI and IATA has already started and the ‘single token journey’ from kerbside to seat are examples of automation projects that are progressing.”
Sustainability was discussed in the context of the finding that it was higher up the agenda for airports than for other respondent types. But even for this group, the impact of the pandemic has been to shift priorities a little, with 47% of airport respondents seeing sustainability as a top 3 priority before the pandemic, and 35% after. Jost Lammers underlined its importance, adding that the European Green Deal gives airports in that region an additional economic focus and that airports were aware of their responsibilities.
Attention then turned to ways to improve resilience. For most of the panel the answer lies in increasing non-aero business revenues. Several commented that in the past the focus has been on operational efficiency rather than customer engagement and revenue generation. That needs to change and is the big challenge facing airports today. They need to rebuild passenger trust and confidence, so they enjoy travel again. And non-aero revenues will need to increase to fund the tech revolution required to support this.
Trust and public perception are expected to be important elements in airport recovery, and of course airports are just one part of a wider system that needs to build that trust. Our panelists agreed that airports and airlines need to work together, to defend the industry and agree new protocols. COVID-19 has forced some progress, but more is needed, and more is possible.
Watch a recording of the full webinar here: https://register.gotowebinar.com/recording/5289076849031224335
What did we learn? The ATM perspective
The final webinar was hosted by CANSO, with Director General Simon Hocquard sharing the chair with Adam Parkinson, Consultancy Director. They were joined on the panel by Niclas Gustavsson, VP Business Dev & Governmental Affairs, SDATS; Alex Bristol, CEO of Swiss ANSP Skyguide, Abdulaziz Alzaid, COO of Saudi ANSP, SANS and Captain Gilbert M. Kibe, Director General of Kenya CAA.
Air navigation service providers were particularly well represented and the event began with information sharing on traffic movements and the survey findings.
ANSP respondents expect to see an increased focus on service scalability, but what does that mean? Alex Bristol of Skyguide summed it up well: “[For us] it’s about how do we in the European network react when demand goes up and down significantly.” If fixed costs are not flexible then you have a problem, how to reduce costs to match demand? Not an easy thing to do inside an ANSP, for most [ANSPs] in Europe it needs to be solved at network level. Niclas Gustavsson offered a different perspective, picking up on the potential for Remote Towers to deliver a service-oriented approach, and even potentially to deliver services across continents – a new business model. It might not be easy, but it is feasible to deliver ANS services to the Middle East from Switzerland. He added, “certainly the business model for enroute vs tower needs to be separated. They are different and need to be treated differently.”
Abdulaziz Alzaid observed that whereas previously they were always chasing demand, now they have capacity but lack funding. They need to find new ways of funding development (future capacity) and that most likely will come from collaboration with tech developers and vendors, and support from the state. The capacity problem will resurface, but the focus now is on productivity.
Just over 40% of respondents to the survey saw opportunities in linking up with telecoms providers. This was a theme that was picked up on by Gilbert Kibe of KCAA, who also sees partnerships and collaboration as a key focus for ANS in Africa. He highlighted two different partnerships happening there which are great examples of the ‘new possible’. The first is a “recently signed contract with Google Loon and Telcom Kenya to transmit mobile signals and 4G LTE capability via high altitude balloons”, which is also a new revenue stream. The second is the partnership between six East African states on a shared Upper FIR for FL245 and above. “With one transponder code across seamless airspace, greater efficiency and more direct routings are possible.” He also highlighted new airspace users such as UAS/drones and how these will have an impact on the structure and activities of the industry going forwards.
Abdulaziz picked up on the collaboration theme again confirming that the government-funded Saudi Future Airspace Concept was still ongoing and was a priority, but that regionally collaboration was challenging, with not every country able to recover at the same speed. As someone who came to aviation from the Oil & Gas and FMCG industries, he was impressed by the degree of collaboration that took place in aviation, “but we need to build on that strength.”
Alex Bristol underlined the issue by proposing that what was needed was ‘network thinking, not local thinking’. Airspace design needs a rethink based on air traffic flows, not land borders. And in Europe the SES Performance Scheme should incentivise network results.
Niclas Gustavsson talked about collaboration in terms of who the partners might be in terms of airport design and evolution. Will we track passengers differently and have a different airport infrastructure? There are developments happening outside of, but on the border with ATM “that we should probably embrace”.
The webinar concluded with a discussion around leadership and another ‘live audience poll’. The audience view was that leadership for implementing change needs to happen first at an organisational level (32%) but also at a regional level (29%).
The panel supported this view. Gilbert Kibe commenting: “Take charge! Do a critical analysis on our organisation and then ‘create’ the future. As we move forwards, be flexible in our decision-making process. Communicate clearly and honestly and compassionately… I’m also a firm believer in Collaborative Decision Making (CDM) so as leaders we need to work together, globally.”
Abdulaziz agreed: “There needs to be a vision. We need to engage people and then enable and equip them to implement the plan. Once we understand where we are heading and how we get there, we then have to hold people accountable, so that we don’t get trapped in planning and replanning.”
Alex said that global traffic flows are important, but we have to respect that one size does not fit all. How do we develop systems so that a controller is valid for a toolset or system rather than a small piece of geography? He added: “In the ‘new possible’ for me the leadership that we need to provide needs to be a true belief in the value of innovation and change, in the value of thinking network not local, and implementing it. Demonstrating the implementation, demonstrating it again. And in that way we take people with us.”
Watch a recording of the full webinar here: https://register.gotowebinar.com/recording/6438231426819267341
Three webinars – common themes
Looking back at the three webinars some common themes emerge:
1- Business models need to be revisited. They should incentivise desired behaviours and be focussed on the passenger. Revenue generators should be linked to cost drivers.
2 – Collaboration, whether through strategic alliance or joint venture, data sharing, or simply ‘working together’ is essential to future progress.
3 – Tech has been fast tracked by the crisis – but can and should go further. It is expected to be a focus of collaboration and of future business model innovations.
4 – The state has an important role to play both as inhibitor and supporter of change – it’s not just a question of funding, but of political will.
The ‘new possible’ is about restructuring for resilience and scalability, fast tracking technology advances, and nurturing fruitful partnerships. It’s also about investing in and focussing on a few important changes and doing them well. We’ll be revisiting these topics in more detail in the coming months. Our thanks once again to the panellists and guests who attended the webinars.