• Wed. May 11th, 2022

Six Ways COVID Has Changed The Airline Industry

While the onset of the coronavirus pandemic has shifted all segments of the travel industry, the crisis has also helped clarify how some industries view their business.

Take, for example, airlines, which have wondered for years whether travelers care most about price, schedules, or any number of factors.

According to a new report from CarTrawler, produced in partnership with IdeaWorks Company, the COVID-19 pandemic has changed the airline industry in a lasting way and has, crucially, shed light on the key product that carriers need to focus on. focus: the destination.

“Before the pandemic, we assumed the travel industry was an artesian well… forever fueling an ever-growing supply of planes and hotels. The pandemic has taught us that there is competition for air travel spending by leisure and business travelers, ”the report says.

“This is why the destination and the emotional value of ‘being there’ is crucial. “

The report, titled Transformation 2021: The Airline Industry Has Changed – Convenience and Predictability Are Missing, identifies six ways the airline industry has changed and why convenience and predictability are at the forefront of consumer demands as they move from point A to point B.

1. Airlines in the network will focus on leisure travel

Recently announced long-haul routes, including United Airlines routes to vacation destinations in Spain, Portugal and Norway, indicate airlines are embracing pleasure travel, the report said.

In addition, aircraft cabins are designed with less space allocated for business class seats, which reflects the belief that part of business travel will be replaced by technology.

To capture the leisure audience, airlines are recommended to move away from transaction-based websites – where consumers must enter their origin, destination, and travel dates – and towards recommendation engines that can better. engage consumers.

2. Business will come more à la carte and the premium economy will develop.

The decline in business travel will encourage airlines to promote business class to leisure travelers, the report continues.

Persistent economic difficulties will also make some corporate customers sensitive to the cost of traditional business class fares.

By creating an à la carte “basic business” fare, airlines can attract both traditional full-service business class as well as travelers encouraged to spend less.

Examples of airlines offering such offers include Finnair, which offers a Business Light fare which charges for checked baggage, seat allocation, lounge access and internet access, and Emirates, which offers a Business Special fare. which charges passengers a fee for lounge access.

In addition, the premium economy will become an increasingly popular choice among high-end leisure travelers and business travelers on a budget.

3. Airlines will be attracted to branded fares and dynamic pricing

With airline ancillary revenues expected to reach $ 65.8 billion globally in 2021, airlines will pay more attention to branded fares.

Using a three-branded pricing approach – good, better, and better – helps meet consumers’ preference for an “average” choice when considering a purchase.

According to the report, on achieving the right combination of reasonable price brackets, equipment listing, and good retail display, about 55% of customers choose ‘best’ or middle, while about 5% will opt for maximum convenience.

“That’s the magic of branded pricing – the inherent ability to encourage the majority of buyers to spend a higher premium than the lowest price,” the report says.

Branded fares must include key amenities and may be followed by a limited number of a la carte choices in the booking journey.

4. More efforts will be made to improve the food purchased on board.

While the pandemic has seen many carriers cut or limit their food and drink amenities, the return of offers will indicate a “return to normal” for consumers.

Lufthansa’s major airlines have introduced an onboard purchase option into its European network that offers local consumer brands to promote fresh and sustainable food.

The “basic business” rates referenced above could also lead to à la carte options in the business cabin.

5. Carriers must offer protection against uncertainty

As the pandemic continues, many consumers remain confused and cautious about the risks associated with COVID-19, travel insurance and airline policies.

While many airlines have promised refunds, travel credits, or waived reservation modification fees during the early stages of the pandemic, most of those protections have diminished and the burden has shifted back to consumers.

Unsurprisingly, confused and cautious consumers are reluctant to book air travel, and they look to the airlines to step up and give them a travel boost.

According to the report, the industry should play the game for the long term, deploying a strategy that anticipates that there will be obstacles in the way of recovery.

Eliminating change fees, or reducing fees, has proven popular with consumers, as has providing full travel credits or refunds for cancellations.

Providing travel insurance for all passengers is also an attractive method of alleviating the uncertainty of travel in the event of a pandemic.

6. Border closures are here to stay

Finally, airlines must be prepared for future border closures as the pandemic continues.

“This ‘light switch’ approach of turning international travel off and then back on is something new. He represents immense power, and with power comes responsibility. But power can also be abused, ”the report says.

“This reinforces the need to protect consumers from uncertainty. The global air transport and travel industry must work hard to limit border closures as a tool of last resort, as ‘destination’ represents the strongest characteristic of [airlines’] product.”