Former RAAF pilot Alexander Robinson is the co-founder of Airly, a start-up that allows customers to book business jet flights via an app. Here, he predicts what this year has in store for the industry after it welcomed a new generation of customers in 2020
COVID-19’s savaging of the aviation industry will continue to be recorded and analysed in detail into 2021 and beyond. What’s more interesting and uplifting is considering what opportunities may arise from the pandemic? How might air travel be improved? Let’s not consider only commercial air travel, but general aviation, freight, military, and for the focus of this article, business aviation, too.
It’s easy and rational to focus on pandemic negatives, but to borrow from QF32 Captain Richard de Crespigny – who articulated the concept of ‘inverting the logic’ in his book Fly! – perhaps we should ask what opportunities this pandemic presents? “And then I had my epiphany,” wrote Mr de Crespigny. “My mind switched. I inverted the logic. I remembered what Gene Kranz, NASA’s flight director, said during the Apollo 13 Mission, ‘Hold it, gentlemen, hold it! I don’t care about what went wrong. I need to know what is still working on that spacecraft.’”
During the Great Depression of the 1920s and 1930s, many companies bunkered down, preserving capital and managing conservatively. Kelloggs, the breakfast cereal manufacturer, did the opposite and doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal. Despite the economy plummeting, by 1933, Kellogg’s profits had risen almost 30 per cent, and it had both emerged as the industry’s dominant player, and established itself for decades to follow.
Kellogg’s strategy wasn’t a one-off either. Harvard Business Review’s analysis of the 1981-1982, 1990-1992, and 2008-2009 recessions showed that progressive companies that developed new markets, invested in enlarging their asset base, increased their acquisition, R&D and advertising budgets during this time either remained or emerged as market leaders or challengers, respectively.
But, recessions and depressions are challenging and present survival risks to businesses. Successful and surviving companies balance judiciously cutting budgets to preserve cash, while strategically investing and innovating. Many companies (17 per cent) don’t survive recessions and depressions; prevention-focused corporations tend to do poorly after a recession, and only 9 per cent of companies historically flourished and outperformed their rivals. Sadly, this pandemic will see businesses and livelihoods lost, but it will enable some to thrive and disrupt less efficient models positively.
2021+
Unprecedented times call for unorthodox ideas. There is no playbook for COVID-19, and creativity and adaptability are essential in testing solutions quickly. This pandemic may be a catalyst for change in all sorts of ways: economic, structural, societal, and global. What worked in business in 2019 may not work or even be applicable in 2021+.
Sara Hales, director of Avistra Aviation Consulting, wrote a recent article titled ‘Are you even an airline anymore?’ In it, she questioned whether the current airline business model, whereby airlines both operate aircraft and sell tickets, is the best business model for the future. Ms Hales’ article was prompted by the bleak question raised by Midas Aviation, asking “Has business travel changed for good?” Similarly, innovative general and business aviation aircraft manufacturer Cirrus Aviation summarised the outlook with “kudos to those that continually adapt and improve”.
These questions and comments raised by Avistra, Midas, and Cirrus Aviation represent broader industry thinking, and introduce some changing travel trends that require us to more generally question the norms of the aviation industry, and how they might be disrupted for the better.
“…recessions and depressions are challenging and present survival risks to businesses. Successful and surviving companies balance judiciously cutting budgets to preserve cash, while strategically investing and innovating”
The ability of technology to replace business travel
A long-held but never materialised threat to business travel, COVID-19 has bestowed video-conferencing with the apex status of communication forms given face-to-face has not always been possible. Having had to rely on video conferencing over such an extended time this year may prompt businesses and travellers to scrutinise the value of face-to-face meetings, and result in less business travel. Face-to-face will always be necessary, but video-conferencing may have proven itself more than capable depending on the context and intended objectives.
Future bizjets
Business aircraft manufacturing is a crowded ecosystem, with several manufacturers competing for a relatively small market size. Manufacturers typically compete on features, innovation, technology, efficiency, performance and safety rather than cost. The corporate aviation sector has been comparatively resilient to the pandemic in terms of business jet usage and its expected recovery to 2019 levels by 2021, against global airlines’ prediction of 2024. If business jets are booming, we can expect to see manufacturers increase their competitive offerings.
At the other end of the spectrum lies the nascent premise of supersonic business air travel. Boom Supersonic, Aerion, NASA, and Spike Aerospace all have next-generation Mach 1.5+ business and commercial aircraft designs in various stages of development, based around the business case that “over long distances people don’t think in miles and kilometres, they think in hours”, and that “if we can fly twice as fast, the world becomes twice as small”. While there will be a speed premium, a supersonic business jet really will deliver a unique value proposition.
Climate change and climate responsibility
Carbon offsetting has been around for some time, but nothing reduces the carbon footprint like not travelling. Extended lockdowns have shown what life without travel and a workplace commute can be like. Carbon awareness may be increased following the pandemic, having grown in understanding and purchasing decisions significantly in 2019, with travellers not only expecting carbon neutral or positive options but questioning whether travel is necessary. This carbon transparency and positivity will be expected of business aviation operators and manufacturers by discerning travellers for the individual conscience and managing the ‘optics’ of private jet travel, which has historically been a luxurious option rather than a hygienic and efficient business tool. Fortunately, the carbon offsetting and management business is thriving and offers a range of options suited to operators’ budget, operational geography and type, and carbon management preferences.
Research and development into alternative fuels and zero-emission aircraft will continue to grow, just as this year saw Airbus reveal three hydrogen-fuelled concept aircraft. This will help move aviation from ‘just’ carbon offsetting to being environmentally sustainable in itself but isn’t without significant and long-term regulatory, technological, and infrastructure challenges.
Control of your travel arrangements and schedules
Mass air travel shrank the world but sounded the death knell for the golden age of travel. Air travel has long been accessible to the middle class, enabling much of the world to travel anywhere within 48 hours. But the scale economics of mass travel dictates that it is on the carrier’s terms. The process of air travel means that for domestic and short-haul flights, as much time can be spent commuting to an airport, and proceeding through check-in, security, waiting, boarding, taxiing; as can be spent airborne. Private travel has traditionally been inaccessible due to its price for all but the wealthiest. But fractional ownership, shared charter, empty-legs, and membership-based air travel are new business models that fit between commercial air travel and private jet ownership, democratising private jet travel experience.
Technology, being widespread apps and smartphones, enables these sorts of new business models to be rapidly distributed and thrive through the near-instant market entry.
Remove anxiety and friction in planning
Point to point and seamless journeying with minimised ‘hurry-up-and-wait’ moments has always been a value proposition of private aviation, but previously this was viewed as a luxury. It is part of the overall benefit of private aviation, and increasingly important to travellers when packaged with private aviation’s total differentiating features.
“Minimising contact, crowds, and journey touchpoints, while ensuring en route social distancing and hygiene, is increasingly important”
Limited commercial air travel options
When domestic and international scheduled services were reduced upwards of 90 per cent from 2019 levels earlier this year, the convenience of the four-times-an-hour QF Cityflyer also disappeared. This prompted essential travellers to find alternative ways to achieve their travel objectives, whether that was through virtual or remote means or via private, charter, shared road, or rail options.
The risk of communicable disease
This is a significant concern among hesitant travellers. Minimising contact, crowds, and journey touchpoints, while ensuring en route social distancing and hygiene, is increasingly important. Australians are lucky to live on an isolated island-continent. Provided that border control integrity is maintained, Australia should remain largely COVID-free. With surging cases through much of Europe and the US, even the federal government rationalised the use of a RAAF VIP Dassault Falcon 7X jet for former minister for finance Mathias Cormann’s official European travels with, “there really wasn’t the practical option to use commercial flights … if Mathias was flying around on commercial planes, he would have got COVID. The risk of that was extremely high”.
Make your own CAVOK
In Australian Aviation’s Summer edition, I wrote that while COVID-19 has severely impacted aviation, it also presents a “prime opportunity for constructive disruption and trendsetting”.
I should have qualified that statement with, ‘provided businesses can stay in business in the first place’.
But, where operators can remain solvent while innovating and investing in their future à la Kellogg’s, there is an upside.
In Airly’s case, we were positively taken by surprise by November and December’s significant upswing in private aviation enquiries and bookings, despite our forecasting that business aviation would increase due to the concerns highlighted above. When WHO declared a global pandemic in March, domestic and international aviation came to an effective standstill. We saw our options to either:
1) Continue business as usual (and likely run out of cash);
2) Rapid hibernation in terms of pausing business until travel improved, watching the airlines as a bellwether (being reactive); or
3) Taking stock of the situation to improve our business model to suit what Airly members needed during the pandemic, while intelligently preserving our outgoings.
Our approach isn’t perfect, and we’ve made mistakes, but in proactively working through the situation we’ve seen our business grow as we’ve helped members travel, we’ve adapted to be more efficient, and we’ve felt more in control of our own flight path. This is what all businesses could and should be doing.
