How will airline travel restart? Interview with Richard Tams, Tailwind Advisory - Business Traveller

How will airline travel restart? When will airlines open and start flying again. Interview with Richard Tams, Tailwind Advisory.
Tom Otley, editorial director of Business Traveller Magazine, discusses when will airlines open and start flying again, with Richard Tams, Tailwind Advisory.
More details:
https://www.tailwindadvisory.co.uk
https://www.businesstraveller.com/
Video Transcript:
- The two main questions when it comes to travel are, when it's gonna start again, and how it will start again? The when is very difficult to answer, because it depends on the policies of each particular government. The how is something that can be discussed now, and perhaps should be, because having it organized will make sure that when it does restart it will restart in an efficient manner. Alexandre de Juniac, who is the Chief Executive of the International Air Transport Association, which is the trade body for airlines, has been saying something similar just in recent days. His point is that the airline industry, and airlines in particular need three types of support. They need direct financial support, they need loans and loan guarantees, and support from the corporate bond market, by government and by central banks, and lastly they need tax relief. All of that is undoubtedly true from the regulation side, yet at the same time Lufthansa has been saying it will take years for demand to come back and has permanently grounded some of its aircraft. Well to discuss what, and how, and when, aviation may come back, we've got a good friend of the magazine, Richard Tams. He spent much of the last 20 years working in airlines and now runs Tailwind Advisory. So Richard, thank you again for joining us. The big question for everyone is, when travel will return, and how it will return. Now, the when bit I think is a bit much to ask you, because no one knows when travel will return. But how it will return, you've got experience of how this works. How does an airline start to stimulate demand again after a long break?

- Okay, well first of all in terms of how aviation might start again and I obviously shall avoid the question of when.

- Yeah.

- I think there are a number of things that will mean that it's gonna be a gradual return to normal, and we'll come to talk about what that normal is, the new normal moving forward. But first of all, there's gonna be an operation requirement that's gonna take time for aircraft to be remobilized, to be taken out of the desert, put back into service and flown again. So, there's gonna be... That's gonna at least delay full capacity being returned for a while. I think also, you're going to see, and we're already seeing signs of it from various carriers, basically retiring aircraft early, or putting aircraft into returning it to the manufacturer. Though you gonna see a sort of more permanent correction in capacity across the whole market. And I think most carriers at this point who are expecting, you know, capacity to be reduced and very much in line with demand. And that reduction in demand is gonna be driven by a number of things. One, it's going to be driven by nervousness of flying, particular among the leisure passenger, it's gonna be driven by restrictions on travel continuing, or requirements for temperature testing and that sort of thing, which will obviously put a natural cap on capacity. But it will also I think be driven, and this is the unknown, but I think it's got to be something we've gotta think about, is that people are becoming more and more familiar with video conferencing, with virtual presence and all that sort of thing. So, I think that even if individual business travellers are not saying to themselves, "I don't need to go and travel so much as I did," I think certainly companies who are gonna be strapped for cash. They're gonna be saying, "You know what, it's worked for the last few months. We're gonna be require you to do a lot more of this moving forward." So in summary I think, yeah, all those factors are going to mean that capacity is not gonna come back to the level that it did, certainly for a long time. And we may have seen a permanent correction in capacity in the market.

- Yeah, I mean that's what Lufthansa seems to indicate with retiring its older planes and saying, "If capacity does come back it will take years." I mean, from the airline's point of view, okay there'll be some business travellers who are desperate to start travelling again, because it's their job, they're in sales, or they need to go and visit, you know, factories or other offices around the world. But what can the airline do to stimulate demand? I mean, I think, you know, you've got experience of previous times when it was tough, maybe not as tough now, what did you do, or what did the airline do when people just weren't travelling or we're trying to stimulate them to travel?

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