It would be an understatement to say that COVID-19 negatively impacted the air industry — KLM, the Netherlands’ own airline, included.
Airline companies were devastated and some even went under. Considering financial difficulties and the long-term pandemic effects, the industry was hit hard with an uphill battle to re-earn the wealth it lost.
KLM and Schiphol Airport faced several strikes over the last few days. About 150 baggage handlers refused work because KLM planned to outsource their work to another company.
Handlers fear that KLM is trying to exploit the extra manpower without having to pay their own staff more wages, says the NOS.
Even though the air industry contributes a small share to a country’s income, it also plays an important role in the growth of the economy, according to the OECD.
Corporate trips plummet
COVID-19 created great financial difficulties across all industries — for businesses and the airline industry, this meant a plunge in corporate trips.
And with the current situation, it seems it will take a long time for business travel to recover. It is estimated it might take up to 2024 for business trips to return to pre-pandemic levels.
While the world is almost flattening the curve on COVID-19 infections, airline businesses are using holiday and leisure flights as compensation.
Carriers that relied on business travellers are now considering leisure travellers to cover a large chunk of operational costs.
While the greatest pool of profit is generated by passengers travelling for business, this number has significantly shrunk, and leisure travellers will have to step in their shoes.
A wake-up call for airlines
Airline businesses started to re-evaluate their flight economics. Before the pandemic, most air service providers were not conscious of their pricing logic.
This wasn’t an issue considering the business clientele, but holiday and leisure flyers are always price-conscious, especially when travelling premium.
Now more than ever, airline businesses realise that they should bridge the pricing gaps between different classes with the drop in business trips.
And this isn’t the only change airline businesses are making. They are also considering stop-overs in what seemed like otherwise insignificant hubs and small cities. The future of Schiphol as a low-cost transfer hub is also seriously in doubt.
Airlines are also reconfiguring their airplane cabins to accommodate more leisure travelling classes.
Debts will increase ticket prices
Financial damages from the pandemic resulted in higher borrowing rates to keep airline businesses afloat. By 2020, airline businesses amassed €171 billion in debt — more than half of the total revenue of the industry that year.
And now repaying the debts is an uphill task. This has triggered the carriers to increase their air ticket prices to keep up with their credit repayment program.
Ranging from stringent policies to new pricing strategies, air travel is among the most impacted form of transport.
What do you think of the airline industry’s new strategies? Tell us in the comments below!