The struggling global aviation industry's revenues may reach 70 percent of the pre-COVID-19 levels in 2021, but complete recovery may take a bit longer as airlines across the world downsize operations to pare costs, said VK Mathews, Founder and Executive Chairman of IBS Software Services, a leading provider of SaaS solutions to the travel industry.
"Most of the airlines will look to lower their costs. This will include removing from their fleet four-engine aircraft like the Boeing 747, as these need a load factor of over 80 percent through the year to be viable," said Mathews, who founded IBS in 1997 after a 17-year stint in the aviation sector, including in Air India and Emirates. The industry veteran said a full recovery in revenues may happen by 2024.
The aviation has been among the most impacted industries globally since the pandemic brought economic activity to a halt. Even though much of the lockdown has been removed, recovery, especially in international travel, has been slow.
For instance, in India, the government now allows airlines to operate at 80 percent of their capacity on domestic routes. But international travel remains restricted.
At the same time, people are looking for a break, says Mathews, who recounted a recent meeting at a five-star resort hotel in Kerala that was booked through December. "People are keen to get out of their homes and get a break. So if you create the excitement of travel, and reassure them of safety, they will," he said.
Much of that onus will fall on governments and other stakeholders, including the airlines. And it depends on how fast airlines adopt the technology.
That will be central to the recovery, says Mathews. "Already, COVID-19 has brought in two years worth of digitisation in the travel industry, in two months. Airlines are increasingly becoming digital," Mathews told Moneycontrol.
IBS provides services to over 30 aviation companies, including American Airlines, Emirates, British Airways, Heathrow Airport and Lufthansa.
"All airlines are thinking of replacing their age-old systems. They are all thinking digital. The airline connects, engages, converses and serves customers digitally. This is easily said, but quite a bit of work happening there," said Mathews.
25/12/20 Prince Mathews Thomas/Moneycontrol
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