NEVER WASTE A GOOD CRISIS

IAN JARRETT assesses the different tacks taken by the region’s airlines to cope with the premium-travel freefall

JUST WHEN THE AIRLINES THOUGHT IT was safe to come up for air, relieved that fuel price hikes were at last levelling off, the world’s economic plunged them into a crisis that defies any coherent forecast of how and when it will end.

For some it may end in tears as the burden of sharply falling passenger demand – felt most painfully in premium classes, weak cargo loads and low yields – combine to force Asia Pacific airlines to take drastic measures to maintain the long-term sustainability of their businesses. These include delaying orders for new aircraft, putting existing aircraft into mothballs, selling aircraft, cutting frequencies and routes, and asking staff to take leave without pay.

Association of Asia Pacific Airlines (AAPA) director general Andrew Herdman said in a media statement that for the first three months of the year, AAPA international passenger numbers were 10.9 per cent lower than in the same period last year, “when traffic was still buoyant”. “Demand for first and business class seats has been hit hardest, as companies economise by tightening applicable travel policies,” he said.

IATA figures show that demand for premium travel in Asia has collapsed, with traffic across the Pacific declining 27.3 per cent in February – the biggest decline of any region monitored by IATA.

Airline executives have not escaped the razor. Cathay Pacific’s senior execs will forego bonuses, while all 17,000 staff have been asked to take up to a month’s leave without pay.

Cathay chief executive Tony Tyler told his staff that the pain will be shared from the top down. “That means that no matter what level an employee is, everyone more senior is taking more pain,” he said.

Singapore Airlines, which gets 40 per cent of its revenue from premium travel, began to withdraw 17 per cent of its fleet from service in April. The carrier is trimming work days and freezing management wages to save costs amid what CEO Chew Choon Seng calls a “sharp and swift” drop in business.

Qantas is planning to reduce capacity, before grounding and selling 10 aircraft. The airline said it would remove 500 management positions and defer aircraft orders in a bid to reduce capital expenditure by at least A$800 million (US$571.4 million) in 2009–10.

Malaysia Airlines has taken a different tack, sharply discounting fares across its first, business and economy classes for domestic, ASEAN and international travel.

“Never waste a good crisis,” Malaysia CEO Idris Jala told journalists. “While we cannot control the operating environment, we can control the way we run our business.”

Newly elected Pacific Asia Travel Association (PATA) chairman Phornsiri Manoharn, speaking at the association’s annual meeting in Macau, believes there is light at the end of the tunnel. Commenting on the global recession she said: “It requires an unprecedented level of unity among us all. Intra-regional travel will be our saving grace. There are over three billion people in the Asia Pacific region and they will travel like never before.”

Many business leaders argue that cutting back on corporate travel may not be the smartest way to build business in the long term. A US travel association survey found that while corporate travel budgets are often the first target of cost-cutting measures, the majority of business leaders believe companies that increase travel budgets during an economic downturn will be better positioned to build competitive advantage.

Nearly three-quarters of businesses surveyed said increasing travel while others are cutting back creates an opportunity to build market share and new customer relationships. Some 50 per cent of businesses said they believed companies that reduce business travel will gain an advantage over competitors who maintain their travel commitment. “It’s a classic trade off between short-term cost reductions and long-term value,” said Kellogg Business School professor Daniel Diermeier. “During times like these, many companies will go too far, and actually cut back on the activities that would best position them to compete in the future.” Dr. Suzanne Cook, US Travel’s senior vice president of research said: “It’s also clear from our survey results that the old maxim remains true; if you don’t take care of your customers, someone else will.”

“Pass the scalpel… to the stewardess”

Most readers will have been on an aircraft when an announcement asked for any doctors to make themselves known.

Now doctors can be on every aircraft – if not in person, at least in real time.

OnAir and Remote Diagnostic Technologies Ltd (RDT) has successfully tested the next generation in-flight telemedicine on commercial aircraft.

For the first time, doctors on the ground can use real time moving video technology to remotely assist passengers onboard as well as the crew managing the emergency situation in the air.

The equipment streams real time voice as well as eight key vital signs, including blood oxygen level and breath gas analysis.

This live contact helps doctors to evaluate a patient’s condition, to arrive at an accurate diagnosis and to advise any emergency treatment required.

Telemedicine can help to avoid one in 10 emergency landings, each of which can cost the airline anything between US$40,000 and US$215,000.

The system was successfully trialled on a bmi flight at the end of February 2009.

Making all the right connections

When you have up to 500 people seated on an aircraft for 12 hours, it can be a challenge to keep them entertained with in-flight systems.

Israel-based Starling Advanced Communications said it believes it can improve the experience with a device that provides better broadband connectivity at a cheaper price.

Starling makes flat-panel satellite antennas providing high-speed broadband “on-the-move” for planes, trains and emergency vehicles.

The technology has recently received its first patent – for its flat-panel antenna technology on the MIJET, an aircraft fuselage-mounted, lightweight antenna containing all radio frequency and cooling and heating devices within a single unit.

The MIJET SatCom antenna system enables high-speed broadband connectivity on any size of commercial aircraft. The low profile, higher capacity, bi-directional Ku band system allows all passengers on a plane to connect while flying, rather than just a selected few.

Ku-band technology, used globally for satellite broadcasting, is ideal for high data-rate communications and is less susceptible to electrical interference problems.

Successful test flights have been carried out on board Boeing 737 aircraft. A MIJETlite will be available for business jets.

Starling said MIJET would open new opportunities for service providers, IFEC integrators and airlines to improve their offerings, services and to generate more revenues.

It will also offer a wider selection of entertainment application choices via IFE such as video-on-demand, live TV, online gaming and multimedia.

Travellers will have the option to use their own devices to access business and productivity applications such as internet, email, VPN, VoIP, video conferencing and instant messaging.

What can we get you?

If, like us, you’ve ever wondered how many meals an international airline serves in one day, British Airways has the answer.

Under the guidance of its taste team – made up of some of the world’s top chefs, restaurateurs and food and wine critics – the international carrier serves 100,000 meals every day.

For the epi-curious, BA buys nearly 500,000 cases of wine every year to serve on board its flights, while enough tea bags and coffee packets are carried to make a total of 4,740 cups during a seven-hour flight.

TRAVEL TIP

“Splash out on a set of noise-cancelling headphones – they make a big difference on long-haul flights, cancelling out a large percentage of airline noise and have the added benefit of being great for listening to movies.”

Who: Sharon Stanley, Senior Director Global Program Management, Asia Pacific, CWT