In January 2010, BA was still reeling from the impact of the 2008 financial crash. The airline had just inked the terms of its merger with Iberia after calling off talks with Qantas. Norwegian was a largely short-haul airline based in the Nordics. Business travellers used devices known as Blackberrys to check work e-mails. Instagram did not exist.
The decade where everything changed is coming to an end. Here are some of the main themes and trends in air travel of the past ten years.
The Future Of Long-Haul Travel Has Two Engines
In January 2010, Air New Zealand, British Airways, Cathay Pacific, El Al, Korean Air, Malaysia Airlines, Qantas, Thai Airways, and Virgin Atlantic all operated the Boeing 747 at London Heathrow.
Today just one airline does, BA.
And on the subject of quad-engined aircraft…
The Hub-Busting Aircraft Won
Before the launch of the Airbus A380 and Boeing 787 Dreamliner, there were two competing narratives offered by Airbus and Boeing.
The future of air travel was passengers flying via major hubs, hence the demand for larger aircraft. Or it was smaller aircraft flying over hubs by opening up new routes that had not previously been financially viable.
There’s no doubt who won the argument. Whilst the Airbus A380 is much loved by passengers, it has only really worked for Emirates and, to an extent, BA. Airbus is to suspend production of the A380 in 2021. A number of airlines including Air France and Lufthansa are retiring the aircraft early with no evident second hand market. Others have cut A380 services from London.
Airlines clearly like smaller efficient aircraft as it enables them to be the exclusive operator of new routes from their hubs. Many more routes will follow in the next decade with the Airbus A321 XLR aircraft.
And on the subject of efficiency…
One Stop Long-Haul Flights Are On Their Way Out
10 years ago, Qantas operated up to five daily services between Europe and Australia via Asia.
BA also operated two daily services to Sydney via Bangkok and Singapore, and Virgin Atlantic served Sydney via Hong Kong.
Today, this has been reduced to one daily flight by both BA and Qantas to Sydney via Singapore.
Air New Zealand will also suspend London Heathrow to Auckland via Los Angeles in 2020 having already suspended its eastbound service to Auckland via Hong Kong.
With so many one-stop options between Europe and Australia/New Zealand on airlines with hubs in Asia and the Middle East, one-stop flights are simply not economic for European and Australian/New Zealand airlines. Qantas’ flight to Sydney via Singapore will in all likelihood be replaced by a non-stop flight from 2023.
Low Cost Long-Haul Is Here To Stay
Before Norwegian launched low cost long-haul flights at Gatwick, some senior industry figures had doubts it would work.
The Boeing 787 was the wrong aircraft and there was little point in charging customers for hot meals on long-haul flights.
Whilst the jury is still out on whether Norwegian can achieve long term profitability, IAG has launched its own low cost long-haul airline LEVEL and all major transatlantic airlines now offer “basic” unbundled long-haul economy fares.
And on the subject of basic economy…
The Decade Of Personalisation
Once upon a time, most airlines had economy and business class cabins and a Saturday night stay rule to distinguish between business and leisure passengers.
Now economy has been split into three cabins with the addition of basic economy and economy comfort at the front. Most major airlines have finally learned to embrace Premium Economy after years of resistance for fear of business class passengers trading down.
Thanks to new distribution channels and the easy ability to up-sell ancillary services via their websites and apps, airlines now target groups such as (in their words) “Frugal Fun”, “Efficiency Seeker”, “Global Getaway”, “Care Seeking Family” and “Leisure Indulgence”.
Airlines Adopted “Densification”
Put simply, this is squeezing in more seats.
Whether it’s ten abreast seating on the Boeing 777 or squeezing in as many seats as possible on Airbus short-haul aircraft with the aid of thinner seats, “densification” became a firm part of many airlines’ lexicon.
The Basic Rules Remain The Same (Part 1)
Sir Richard Branson and Willie Walsh may not agree on many things, but there is one thing they do agree on.
Both would say that new airlines need to pursue steady, cautious growth as new routes take years to establish and excess unprofitable capacity is destructive of value.
Norwegian did not do this. Nor did failed airlines such as Primera Air and WOW air. After a period of seemingly relentless expansion, Norwegian is now desperately backtracking having suspended many long-haul routes and forming a joint-venture to relieve itself of future aircraft financing obligations.
The Basic Rules Remain The Same (Part 2)
A text book case study on airline strategy is Swissair’s “Qualiflyer Alliance”
Swissair over-stretched itself and exposed itself to large financial liabilities by acquiring minority stakes in a series of airlines such as the long bankrupt Sabena. Swissair collapsed in 2001, before being resurrected as Swiss International Airlines.
Acquiring minority stakes in airlines with no effective control is widely seen as a recipe for disaster. However, this never deterred Etihad which acquired stakes in a series of airlines: Air Berlin, Air Serbia, Air Seychelles, Alitalia, Jet Airways, and Virgin Australia. Almost all have proved to be calamitous.
In the words of Willie Walsh on Etihad: “You think you have control, they take your money, they spend it and then they tell you to get lost.”
Heathrow Slots Became Very Expensive
Heathrow slots have always commanded a substantial premium, particularly since EU-US Open Skies.
In 2016 they became even more expensive as Oman Air paid $75 million for one single slot pair, previously held by Kenya Airways.
The Social Decade
Social media was already well established by 2010.
Every airline is now one tweet away from a worldwide social media firestorm. Whether it’s a disgruntled passenger buying $1,000 of promoted tweets to harangue an airline for missing baggage; BA incurring the wrath of Indian cricket fans; or video footage of a United passenger being physically dragged off an aircraft for the temerity of having a valid ticket and boarding pass.
On a more positive note for airlines, it does allow brands to show more personality than they can through traditional advertising media. It also allows staff to communicate directly with customers, albeit within the confines of their employer’s social media policies.
Instagram and the smartphone have also commoditised the photograph. It has removed almost any sense of mystery about travel. Practically every destination, hotel and restaurant on your itinerary can be seen in advance on Instagram.
Social media is often seen as the target for society’s ills. But its users learn and adapt quickly. The era of the Instagram “influencer” who will promote anything for cash, rather than share a specific field of expertise, is coming to an end.