Consultant Insight: Post-pandemic airline survival depends on transformation

The airfreight industry has long needed a push toward technology adoption and digitalization. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] “We must transform paper-based and legacy processes into digital ones and use data to drive decision-making in all facets of our business,” Alexandre de Juniac, IATA’s Director General and CEO, said in 2019. “Organizational silos will need to be shed to ensure a holistic focus on the entire customer experience. And we will need to do all this while continuing to ensure the highest levels of safety, security and environmental sustainability.” Fast forward just one year, to 2020, and the airline industry found itself in a global crisis in which it recorded one of the steepest historical drops in cargo capacity in March when passenger airlines were suddenly grounded when the COVID-19 pandemic hit. As capacity slowly returns, industry observers should consider how the airline will industry transform after the pandemic. “This year [2021] will continue to be a period of both challenge and opportunity,” Rob Walpole, vice president of Delta Cargo, said in a Jan. 12 press release. Indeed, there are a lot of unknowns this year — including how quickly the vaccine roll-out occurs, when passengers will return to the air, and the outlook for global economic health — all of which will create challenges and opportunities for the airline industry. Considering de Juniac’s 2019 statement once more, we can see not just a call for seizing the opportunities of 2021, but also a mandate for true transformation. For a number of airlines, and particularly those combination carriers with large passenger operations, surviving is more the focus these days than true transformation. Surviving the slow return to normal passenger operations will likely require transformation, though. In a previous article, I wrote about American Airline’s wine subscription service as a unique initiative and a great way to stay in touch with customers. Such products fall short of being transformational, however. In its earnings call earlier this month, Air Canada noted it would focus more on cargo service in 2021, having operated over 4,200 all-cargo international flights in 2020. In addition, the passenger airline is utilizing its domestic passenger network and entering the e-commerce space. During the fourth quarter, it introduced direct deliveries to consumers’ homes, and a branded platform is expected soon. This would be transformative for the airline, but it also seems to be an abrupt reaction to address the current market’s need for cargo capacity. Meanwhile, Delta Airlines appears to be in a bit of a holding pattern, slowly adding back international flights in expectation of pent-up demand from customers for travel. It is also working with IBM to “modernize and migrate its applications to the public cloud.” “As an airline industry leader, we understand the critical need to constantly evolve our digital presence and enhance our customer and employee experience to not only help respond quickly to the dynamic changing conditions but also reinforce brand loyalty from our customers,” said Rahul Samant, executive vice president and chief information officer at Delta Air Lines. “IBM will help us migrate to the cloud and create a new operating model that will transform and modernize our technology platform.” Chirag Dekate, an analyst at Gartner Inc., said Delta is one of several companies moving to the cloud to give IT teams a unified platform to develop, deploy and maintain applications. “Organizations that do engage in these journeys will certainly be positioned to capitalize on the growth momentum that companies will experience at the end of COVID,” he said in a Wall Street Journal interview . Perhaps Delta has heeded the advice of IATA by updating its digitization process — a smart move to lead it into a post-pandemic environment and one that can be considered a path towards true transformation.

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