My take on Air India Express has always been that governments should retreat from the aviation industry, which calls for a lot of management efficiencies, VK Mathews, chairman, IBS Group says.
“The aviation industry will take about three years to recover completely. But the players who opt for artificial intelligence and RPA tools will emerge the winners,” said VK Mathews, chairman, IBS Group, who’s regarded as a global thought leader in the aviation technology industry. The Covid disruption has also been creating opportunities for talented jobseekers, breaking geographic barriers, he said in a telephonic interview with M Sarita Varma from Dubai. Edited excerpts:
Q: The aviation industry has had its share of dark clouds during the 9/11 and then during the 2008 financial crisis. Dubbed a black swan event, hasn’t the Covid-19 pandemic caused as big a loss as $84 billion globally for the aviation sector, which was witnessing double-digit growth? In India, too, in the RPK (revenue passenger kilometre) metrics, the dip is estimated to be about 50% in 2020. How do you see the coming months?
The last four months have been turbulent. Following the Covid-19 outbreak, the aviation industry is in survival mode. Many bankruptcies are happening. I can see several more coming. World over, governments are stressed, after having to cough up enormous stimulus packages to rev up the economies. One cannot expect big infra investments too.
In India, it would have helped if the government had, from the beginning, allowed the international flights to operate, provided they ensured adequate health safety measures for passengers and staff. Carriers like Etihad, which have access to advanced technology, have been operating by systematically using HEPA air-filters within the cabin, keeping the cabin air as sterile as in an operation theatre. With health risks minimised, more passengers would follow. (In early June, the technology team of IBS had taken over the flight operations of Ethiad Airways.)
Q: Do you mean to see that post-Covid, Darwinism would play out in favour of companies with deep pockets for investment in technology? Wouldn’t that be sad for public sector operators like Air India Express, which is stuck in so much debt? What would be the new opportunities?
A My take on Air India Express has always been that governments should retreat from the aviation industry, which calls for a lot of management efficiencies. Otherwise, it would run up phenomenal debts. Post-Covid, almost every company that survives would be through technological transformation. You can see it happening, in education, manufacturing or travel. In aviation, too, the weak firms would get weaker and the strong ones would go stronger. After the pandemic and the lockdown, there is a whole new demographic segment, which has been exposed to the digital possibilities. This could throw up new opportunities in sectors like education, retail etc.
Q: Taking the social distancing protocol seriously, some Indian airports like Delhi have set up auto-managed disinfectant air filters and crowd-management facilities. In Indigo, the pilot training has gone on e-learning mode. How would this change air travel?
Betting big on AI and RPA is going to be the gamechanger in aviation profitability in the coming years. Contactless journey should be ensured from pre-entry in airports to security checks and from boarding to landing. The present disruption is an opportunity to make airports ready with facilities like e-boarding passes, thermal screening of people, facial recognition, self-service kiosks, virtual helpdesks, virtual baggage identification etc. More passengers will be confident about air travel if contactless travel and minimal health risks are ensured, using latest RPA and AI tools. If this transformation happens, I believe, the aviation industry can get back to its 2019-highs, by about 2023.
Q: Indian Air Transport Association (IATA), too, foresees airline passenger traffic rising 55% in 2021, from its down-point in 2020, although it would be much below its 2019-level. What would be the pattern of the recovery, if a vaccine or cure is not in place?
Domestic air travel would be the first to recover. Japan, China, the US and, to a certain extent, India have a huge share of its air travel in the domestic segment. International travel might take a little longer since the lifting of travel bans and lockdowns are uneven. In this segment, essential travel would soon be on its feet. By essential travel, I mean, families separated due to sudden travel freeze, who need to reunite, and also business travellers returning home. As I am in Dubai currently, after speaking to several peer spirits, I can sense the psychological urge in people to go out and beat the lockdown blues. This “dying to go out” travel urge will spearhead the recovery of flight business, wherever there is a rising middle class.
Q: You talk about the Covid disruption creating opportunities and structural changes in businesses globally. How?
Already three distinct processes are happening, after the pandemic brought more people to the digital plane. One, disintermediation, where middlemen are done away with. Two, personalisation. That is, when an airline remembers what menu a customer favoured during the last flight. Three, virtualisation, where an airline would sell you ancillary products, too, identifying your need. I was able to keep my flock together and manage workflows from 25 locations of IBS group across the globe because of the newfound flexibility of the workforce. Several other industry heads might have had this experience.
One of the greatest beneficiaries would be the top talents among jobseekers. With work-from-home and online conferences gaining currency, someone could earn salaries from a Fortune-500 company in the US or Europe, sitting in a remote hamlet in India. To look at it in another way, online teaching possibilities could even make a scholar professor in an Indian town emerge as a faculty in Harvard, without leaving his home at all. The pandemic was a terrible shock, but it has left a long jet trail of economic possibilities, too.