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CASE STUDY

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5 views

CASE STUDY

Uploaded by

Joshua Miguel Dizon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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FINAL REQUIREMENT CASE STUDY

NAME: DIZON, JOSHUA MIGUEL B. SUBMISSION DATE: NOV. 10, 2023

INSTRUCTOR: ENGR. CHRISTIAN ANGELO R. MANGABAY SECTION: AE-402

INTRODUCTION

Relaunching transport and tourism in the EU (European Union) after COVID-


19, is a case study that will sought through the problems that the COVID-19 have
gave to all of airlines or in the aviation industry, and that relaunching this branch of
transport together with tourism in the EU after the pandemic will be a challenge,
and pose a question if aviation industry can recuperate, adjust their own
organization to the sprouting trends and technologies after the pandemic despite
the overwhelming loses and risk that will be involved. This case study analysis will
gave a different perspective about the situation, and will be able to proposed some
solution or actions that can be taken to relaunch the transport and tourism in EU.

BACKGROUND

Due to the dangers of the Covid-19 virus airline industry experience a


decrease in flight traffic to a severe loss in revenue for airlines and aviation
operators. In April 2020, it recorded the largest decrease of worldwide flights (-
55%), with traffic figures dropping by 92.8%, corresponding to a loss of 1.7 million
passengers. One of the important basis of airlines for revenue which is load factor
became in between numbers of 50% and 60%, and that lowest point of 27%. By the
end of 2020, almost 51% of the total European fleet were grounded. The total
number of flights in 2020 in Europe was reduced by 55% (or 6.1 million flights)
compared to 2019, leading to a reduction of 1.7 billion passengers. European
airports on the other hand lost up to €33.6 billion, as daily movements were
reduced by 73% compared to 2019. The difference in impact on European and non-
European airport traffic was significant, as European airports lost 1.32 billion
passengers compared to only 400 million passengers at non-European airports. To
sum it all for the European airlines, it amounted a revenue loss of €22.2 billion. The
estimations for 2021 expect a recovery to 51% of 2019 levels but only in 2026 are
those levels expected to be reached again.

Airline Industry being a large scale of business, it also means that a large scale
of jobs have been affected as well. Also because, businesses scale down their
organization to decrease cost and salvage its business and avoid bankruptcy. This
translated into job cuts and difficulties for the recovery of the sector. Over 6.4
million direct aviation and supporting-aviation jobs in Europe have been lost, and
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FINAL REQUIREMENT CASE STUDY

globally 4.8 million more will be under threat by the beginning of 2022. Sadly, the
stagnation of economic growth, paired with increasing trends due to people
adapting to the situation will increase costs but also because with the safety
protocols being placed and the often changing travel restrictions, hints to a long
period of recovery for the aviation sector. This translated into job cuts and
difficulties for the recovery of the sector.

The Covid-19 pandemic also affected the market structure of the airline
industry making it more complicated for the businesses to grow and recover from
the losses. The pandemic has caused a decline of more than 50% in connectivity to
major economic cities, such as Frankfurt, Paris, and Amsterdam due to travel
restrictions but in the long-term the risk is that the connectivity of cities established
pre-COVID-19 will not be fully recoverable, due to the economic pressure airlines
will continue to be confronted with. Due to the market structure and for the
businesses to survive this downsizing phase, companies need to quickly put an end
to cash burns. This will prove difficult due to the semi-fixed nature of most costs
that airlines are bound to undertake, such as depreciation of aircrafts and flight
equipment, rental and amortization expenses and insurance. Whilst the rollout of
COVID-19 vaccines in Europe will be determinant to turn airline companies’ cash
positive in the last quarters of 2021, the current dramatic drop in demand requires
the airline industry to survive by burning through their cash balances. On the basis
of its analysis, it found that the average airline company would run out of cash after
8 to 9 months. This period matches Q1 and Q2 of 2021 and is before the vaccine is
administered to enough people to become effective and before travel restrictions
can be relaxed more broadly. This could result in either the bankruptcy of some
medium and smaller airline companies, the need to provide public support to
aviation operators or the increasing presence of governments in sustaining airlines,
thus significantly affecting the aviation market structure. Secondly, the cost of
health-related measures and the shape of recovery for commercial flights
represent two great uncertainties for companies intending to resume air transport
services. On the one hand, fixed costs are likely to increase due to the necessity to
implement new safety measures, (such as disinfection, the provision of PPE, viral
tests and temperature checks). Most airlines are still in the market only thanks to
the financial injections received by governments. Travel restrictions and quarantine
measures impede the recovery of the sector and create a weak demand for
services. Not only may consumers decide to switch to other types of transport, such
as high-speed trains, but also the newly-introduced approaches to services trade,
such as video-conferencing and remote-working, are shifts that are likely to

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FINAL REQUIREMENT CASE STUDY

become the new normal, affecting the concept of business travel forever. In
addition, the continuous digitalization may substantially change the travel
experience.

Overall, many mid-term effects of the pandemic risk to undermine the


recovery of the industry, essentially changing the market structure within the air
transport sector.

While the historically deep losses represented by COVID-19 prevail, financial


performance should start to grow again towards the end of 2021. IATA predicts that
the re-opening of borders from mid-2021 onwards, hopefully allowed by the higher
number of vaccinated individuals, will be the main driving force behind the increase
of revenue. At the same time, while costs will still be considerably high, IATA’s
forecasts suggest they will not outweigh profit estimations, constituting an
enhanced financial performance and a positive close of 2021.

AIMS/GOALS/OBJECTIVES

Rebuild and recover in a such a way that hygiene and sanitation measures
are in place, guarantees physical distance to not only for the revenue passenger but
also for the workers. Rebuild the cleaning protocols for cabin and airports, and
implement necessary equipment to keep the environment clean and hygienic. As a
survey proves the 68% were more concerned in cabin clealiness than ever before.

Implementation of PCR testing, wearing of mask, wearing of PPE for the


personnel, and also the Covid-19 vaccine requirements, to both the revenue
passenger and also to the workers, to communicate to all the personnel and
passenger that they are safe. As it would be an important factor for the travellers
to feel more safer.

Adapt with the digital processes, digital equipment, and self-service


technologies to limit physical interaction to not decrease the communication with
the passenger but also having flexibility with them by updates and notifications
through messaging platforms in real-time. As passengers wants more confirmed
information regarding their safety from air services, and that will also affect their
decision to travel according to a survey.

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FINAL REQUIREMENT CASE STUDY

Expect and adapt with the consumers attitudes and behavior and their travel
expectations as this would become a trend in relaunching the air transport and that
this would earn their pivotal trust to the company.

Adjusting with the demand per country knowing that their would be travel
restrictions, willingness of the population to travel, availability of vaccines, and
among others.

CONCLUSION

To re-establish the company or organization back again in the normal and


sustainable business environment it needs to adapt their system of action in order
to keep on to the trend and also for the business to adapt to the demand.

RECOMMENDATION

Implement strategic planning in order to clean the facilities, and also to keep
the company’s employees.

Keep intact with the trend in the technological aspects of the industry but as
well as in keeping the system innovative, and also in trend with the demand.

REFERENCES

https://www.europarl.europa.eu/thinktank/en/document/IPOL_STU(20
21)652235

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