A former managing director at American Airlines Inc gave Third Bridge Forum the lowdown on the lessons airlines learned from previous outbreaks and the long- and short-term implications of the current pandemic.
The Interview started by looking into airlines’ experiences of responding to pandemics, specifically SARS and H151. In fact, “most of the carriers have developed contingency plans and protocols as part of their routine business resilience planning.”
The specialist outlined what teams and processes the contingency plans would involve, as well as how they have progressed. “With SARS we actually learned what the process should be as an industry, and so with H1N1, we put in a lot of those protocols.” These include: “making sure the aircraft are clean, making sure there’s a great amount of transparency, then talking with the employees and the customers in a way that keeps them up-to-date.”
The conversation turned to the major US airlines announcing dramatic capacity cuts, and how this is affecting the bidding process for pilots and flight attendants. “Optimising the flying schedule to feed into the bidding process generally takes 45-60 day lead time.” If this is missed, airlines will generally face extra labour costs.
Another major issue facing airlines’ revenue is refunding customers with cancelled flights. Although there are different refund processes for each company, “the airline will incur all of the net costs of the flight cancellations, including the lost revenue that goes with that”. Instead, rescheduling proves less of a penalty. Moreover, if the cancellation is made well in advance of the scheduled flight, the airline will be able to save money through reduced operating expenses.
Other topics the specialist covered include taking planes out of service, whether cost savings from reduced schedules can mitigate revenue losses and what to look for in the upcoming weeks that could impact airlines even more.
To access all the human insights from Third Bridge’s Airlines’ Operational Responses to Coronavirus Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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