A Roadmap for the Recovery, Restart and Return of Travel
The world has changed.
The last six months have been hard for everyone in travel. We are collectively living through the biggest crisis in travel in our lifetime. We have all had to make difficult decisions. Decisions that we thought we would never have to make.
OpenJaw had some ‘insider knowledge’ as we saw what was happening in China and Hong Kong faster than most as these are key markets for us given our large installed base of Chinese airlines using our platform as well as having a substantial China R&D centre located in Dalian. OpenJaw went from having its best year ever in 2019 to a situation where the world of travel simply shut down in a few short weeks in March 2020.
Like everyone else, remote working became the norm. Fortunately for OpenJaw, we transitioned all of our systems into the Cloud several years ago to facilitate shared financial & HR management, distributed development and delivery across our 6 international offices and customers. And as heavy users of tools such as Google Hangouts, Lifesize and Zoom video conferencing, we found that the transition to full working from home was seamless.
OpenJaw has created a four-phase framework through the lockdown phase of the pandemic as a planning tool – you might find it helpful too.
The 4 ‘R’s Framework of COVID-19 Planning
Forget the idea of a ‘new normal’. That concept is finished. No-one can forecast what is really going to happen. ‘Normal’ refers to a pre-pandemic frame of reference. Too much has happened in a short period of time. As the CEO of AirBnB said earlier in the pandemic – and they still hold true: there are only two firm statements one can make about travel today:
We don’t know when travel will return to any level of passenger throughput like 2019
When travel does return, it will look different.
That’s it. Everything else is mere conjecture.
Here at OpenJaw, we created four phases to explain each stage of the response to the COVID-19 crisis and how this will, in turn, help us plan for the future:
Return to Growth
Let’s look at 4 ‘Rs’ – ‘Retrenchment – Recovery – Restart – Return to Growth’ in detail.
Retrenchment Phase: March-May 2020 – lockdown across the globe, and shutdown of travel. Many airlines stop flying, hotels shut and countries close their borders.
Recovery Phase: This is the phase we entered around June 2020. Some airlines will increase scheduled flying again with reduced capacity to keep connections open between major airports. Hopes abounded at the start of the summer, as many European countries seemed to get the pandemic under control and that air travel demand would return. For a few weeks it seemed like it might as Europeans took their summer holidays.
This recovery phase has now extended; we are now entering an uncertain period for the balance of the year. Quarantine rules mean that options are limited. Airlines and hotels work out how the challenge of social distancing and yield requirements. Second-wave infections have broken out in many European countries, including the holiday hotspot of Spain, and several countries have re-imposed two-week quarantines for inbound travellers. Most business trips simply aren’t feasible with two-week quarantines.
According to Eurocontrol, air travel demand in Aug 2020 was 50% of 2019. Eurocontrol believes demand by year end 2020 will still be at least 50% of 2019. Elsewhere in the world, there is some positive momentum in domestic markets. Russia is leading the way, and China is showing signs of domestic growth. Momentum is building in New Zealand, South Korea, and Vietnam. Even in these countries though, airlines are suffering from the lack of international demand and a poorer yield environment.
Restart Phase: IATA has demonstrated the low incidence of inflight COVID-19 transmission. The risk of a passenger contracting COVID-19 while onboard appears very low with only 44 identified potential cases of flight-related transmission among 1.2 billion travellers, one case for every 27 million travellers. The vast majority of published cases occurred before the wearing of face coverings inflight became widespread.
Restart will depend on the implementation and acceptance of new protocols to match the expectations of travellers. Hygiene factors, such as social distancing, health checks, and touch-free environments start becoming the norm.
EU member states will have to co-ordinate their approach to cross-border travel in the pandemic and agreed decisions based on a “traffic light” map drawn up by the European Centre for Disease Prevention and Control that categorises regions in Europe into green, orange and red zones according to COVID-19 infection rates.
The fact that national governments continue to set their own policies, such as requiring negative COVID-19 tests or periods of quarantine and have rules that can differ between regions within countries as well as from country to country mean that the Restart Phase does not look like it will properly start till 2021.
Return to Growth Phase: Talking to our customers and industry analysts, OpenJaw believe this will be in 2022 at the earliest. There is likely to be a degree of pent-up demand to visit friends and family in the near-term as travel restrictions are lifted. However, our customers are less optimistic about the return of business travel. Travel sectors of countries that lack large domestic markets will recover more slowly and will open up first to travellers from nearby countries.
IATA have revised down their passenger forecast over the next five-year period, suggesting that revenues will not return to pre-COVID levels before 2024.
Conclusion: from ‘Restart to Return to Growth’
Travel will return, of that there is no doubt. If airlines, hotels and car hire firms can act early and be flexible with previous hard and fast rules, travel can adapt to the changing needs of travellers in a post-COVID-19 world. Capturing early demand by redeploying resources quickly to the markets that recover first, introducing self-service, physical distancing, and new cleaning protocols will help restore consumer confidence, thus laying the foundation for the recovery of long-haul international trips.