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RPT-Airlines look past slow recovery to post-pandemic travel

Fri, 23rd Apr 2021 06:00

(Repeats from APRIL 22, no changes to text)

By Laurence Frost

PARIS, April 22 (Reuters) - Even as new setbacks cloud their
path to recovery, airline bosses are focusing on the lasting
impact of COVID-19 on premium travel, technology and other
pillars of their business.

Aviation leaders, forced to gather virtually by the
pandemic, have been gauging its longer-term fallout at the World
Aviation Festival, after more than a year of lockdowns.

Drawing many top executives and thousands of participants,
this week's event comes as doubts over the northern summer
vacation season renew scrutiny of airlines' cash and their
ability to withstand another washout.

The addition of France, Britain and 114 other states to the
U.S. "Do Not Travel" list has also cast a pall.

"There will be a lot of carriers that will not make it
through," Air France-KLM Chief Executive Ben Smith said, citing
nameless rivals that were "not viable prior to the crisis".

For survivors like state-backed Air France-KLM, market
consolidation would be welcome, Smith said, adding: "Even if it
takes longer than planned for traffic to return, with a
reduction in capacity that's a good balance for us".

Air France-KLM expects to need more capital following a 10.4
billion euro ($12.5 billion) bailout in 2020 and 1 billion-euro
share issue this week. Long-haul juggernaut Emirates may also
need to raise more cash within months, the Gulf carrier's
President Tim Clark said during the event.

BUSINESS DECLINE

Despite the deep uncertainties, executives are looking
beyond the pandemic to anticipate underlying shifts.

High on the list is a structural slump in business travel as
many future meetings - if not airline conferences - stay online.

"A large percentage of this traffic will not come back on
long-haul," aviation consultant John Strickland predicted, as
companies curb travel costs and carbon emissions.

"You can't beat face-to-face in many business situations,"
he said. "However a big amount can be cut."

That will hit yields, or fare levels, Clark and his Virgin
Atlantic counterpart Shai Weiss acknowledged, although the
Emirates boss expects leisure customers to fill business cabins.

"If you drop (fares) by 15% or 20% they will come to
business," Clark said. Such customers are "not quite as good as
the corporate segments were, but hey ho, you take what you can
get and you fill your aircraft."

The pandemic has sped efforts by airlines and airports to
integrate digital passenger services, information and document
checks, while the race is on to deploy "contactless" processes
and digital health passes with COVID-19 vaccination and test
certificates.

DIGITAL DRIVE

EasyJet CEO Johan Lundgren said digital platform upgrades
hurriedly deployed to cope with last year's flood of flight
cancellations and refund claims were now among post-crisis
"silver linings".

"Cost bases have been reset" after the low-cost carrier
invested in "self-service" capabilities for its booking system,
he said. Airlines that have used the crisis for digital upgrades
"will come out of this in a more efficient way."

Even with traffic around 10% of pre-crisis levels, airports
have warned that COVID-19 paperwork and test results are already
clogging "pinch points" in check-in and boarding, despite full
staffing.

Without swift digitisation of processes including test and
vaccine checks, airports could be overwhelmed by a traffic
uptick as soon as May, said Emiliano Sorrenti, chief information
and technology officer at Aeroporti di Roma, which operates the
Italian capital's Fiumicino and Ciampino airports.

"When we reach just 50% of (pre-crisis) passengers, will we
be able to cope with those numbers given the new regulations?"
he said. Fully seamless services that now seem far off will
rapidly become a "mandatory level of automation", he expects.

Vaccination setbacks and concern over COVID-19 variants
suggest airports may have a little longer to prepare.

Global airline body IATA this week cut its traffic forecast
to reflect a weaker international travel outlook, despite
domestic rebounds in U.S. and China.

But Clark, who has put off his retirement to pilot Emirates
through the crisis, remained upbeat about the recovery
opportunities awaiting his eventual successor.

"We are, dare I say it, on the threshold of something really
good here," he said. "Once this pandemic is over."
($1 = 0.8299 euros)
(Reporting by Laurence Frost; Additional reporting by Sarah
Young in London and Conor Humphries in Dublin; Editing by
Alexander Smith)

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