This time last year, we announced the airlines and airports with the best on-time performance of 2019, however this year—as you undoubtedly know first-hand—the story is different.
Our team of experts shifted focus to the impact of the pandemic on air travel and analyzed the precipitous decline in flight schedules, rapid increase in cancelations, the grounding and retirements of aircraft, the reduced passenger traffic, aircraft reconfigurations and aircraft leasing.
The Cirium Airline Insights Review 2020 brings these insights together and delves into the data from The Cirium Core—a very deep and very wide data lake with over 2,000 sources.
The pandemic challenged airlines like never before and real-time data became indispensable. Data illuminates.
It illuminates the impact but also the future.
Cirium predicts seven key trends that will emerge in 2021. Trends that will help the industry to recover, return stronger and accelerate digital transformation.
- Consolidation of airlines
In addition to over 40 commercial airlines that have ceased or suspended operation since the start of the year, more airlines struggle as the cash burns. Airlines have already consolidated several times in the past in EMEA, the US and China into three main full-service groups and one or two large low-cost carriers (LCCs). It is possible that mid-sized carriers in the US will merge or will be acquired by their larger competitors. This trend hasn’t yet occurred in Asia-Pacific to a similar extent, so we expect to see movement in the region. Larger airlines may acquire smaller carriers, and some may merge. For example, Korean Air acquired its local rival, Asiana Airlines. We expect more domestic competitors will consolidate. However, cross-border consolidation in APAC is unlikely due to ownership control rules. - New-generation aircraft in service
Newer aircraft will return to the skies, a huge monthly cost-saver on fuel burn. In addition, the airlines have clear objectives for “greener skies” and so we will see domination by aircraft with the latest technology. This year has seen more narrowbody aircraft fly, mainly as domestic flights are recovering faster versus international. The popularity of the Airbus A321neo is evident. The Boeing 737 MAX is now making a return to the skies. Each of these aircraft have the latest technology and excellent range, are the furthest away from the next maintenance check, and are the most fuel efficient. - Aircraft retirements and reconfigurations
There will be a surplus of aircraft. This is no surprise with 30% of the global fleet still grounded and with future demand looking slow in its recovery. Larger aircraft such as the Boeing 747 and the Airbus A380 will be retired sooner than expected. Some aircraft types will be converted to cargo. We are forecasting a significant increase in these in 2021 and a further rise in 2022. This is likely to be driven by strong growth in the e-commerce market, helped by customers making their purchases online. - A new way to forecast demand
During Q4, bookings were down 78% compared with the same period in 2019. That is even worse than the summer period of 2020—and even then, we were seeing 40% of bookings being made last minute—as little as one to three days before travel. Airlines have a harder time to use historical data to forecast future demand and need new indicators instead—mainly search and sentiment. This will include online searches people make, price comparison sales data, and social media activity. Airlines looked to these indicators previously, but as a secondary source. Moving forward, these are likely to become primary indicators for predicting demand and developing pricing strategies. - Airline operational flexibility
The six to eight-month flight scheduling window has changed to a quarterly or six to eight-week planning process due to the volatility of this year. We will see more of this dynamic scheduling activity as airlines develop quicker reactions to demand pricing and equipment use. This will help break down the legacy silos that existed between commercial planning network teams and revenue management. The airlines will need operational resilience and seamless collaboration between their planning and operations. - Digital traveler experience
Real-time traveler information in the form of notifications and alerts is critical to airlines and their passengers. The booking window is now close to the day of travel, so proactive communications are needed in a short timeframe. This is essential in times of disruption and is crucial to building traveler confidence. Experiences at the airport and in flight will also need to be touch-less and safe, so the implementation of AI technology will accelerate, and we will likely see new technologies launch to improve the experience of flying. - The rise of aircraft leasing
With the financial struggles of airlines as a result of the pandemic, the leasing sector is likely to take on an even greater role. We expect to see leasing companies push past the 50% ownership share of the global fleet, which has been coming for some time. Sale-and-leasebacks in particular are an immediate source of cash, something airlines so desperately need.
