Customer empathy may now beat price in encouraging us to book? But what price will consumers ultimately be willing to pay for peace of mind?

18 May, 2020

Aviation’s pause button is poised to be released with an increasing number of airlines now confirming plans to resume operations over the next weeks and months, albeit with schedules much reduced from those offered before Covid-19 hit the world. However, one big question has yet to be answered: even if airlines offer flights, will travellers utilise them?

Experience from those countries ahead in their recovery seem to suggest that there is a sentiment for travel, but stimulation could play an important role until any vaccine or immunity passport scheme is introduced. In effect, while there remains uncertainty and risk of infection true demand will naturally be diluted.

The LCC revolution has highlighted the role that price can play in influencing travel habits. With low fares the world was suddenly open to a much wider demographic of travellers and we can expect low fares to be used now to encourage travellers to fly, although the future will certainly see average fares rise in the medium-term.

But, how successful will low fares be a stimulus? Many of us that flew with Ryanair in its early days as a LCC deemed we would never fly for them again, but its low fares (and convenient point-to-point regional network) enticed us back. Its CEO and man behind its repositioning from a small Irish regional carrier, Michael O’Leary, knew the power of low fares in a mass market where travellers had been blocked from using airlines due to the high price to fly and thrived of the bad publicity. The more complaints and negative stories the airline received the more out-spoken he became, and the more ‘free’ publicity the airline received.

Bill Franke, a respected airline investor and co-founder and managing partner of Indigo Partners which owns Frontier Airlines and has stakes in Volaris, JetSmart and Wizz Air, has highlighted the shifting trend and acknowledged that in the "early days" of a return to travel, passengers "won't be motivated by the price of the ticket" and will be more concerned with their own personal safety. According to Mr Franke, the traditional LCC approach of offering low fares "doesn't really work here" and a "sense of well-being, of safety, has to be developed" for passengers.

It is clear that an increased empathy with passengers will be required. But, that extends beyond the airlines and also includes the airports, especially when the experience of using them has been linked to having major surgery by the boss of one of the world’s largest global hubs.

In a Bloomberg interview, Dubai Airports CEO Paul Griffiths described the pandemic and resultant crisis as “unlike anything we've ever seen in the aviation business,” he said. “We're dealing with a monster… going through an airport the whole travel experience will be as enjoyable as open-heart surgery,” he explained.

Even if low fares are not as big a driver of returning demand, Ryanair Holdings CEO Michael O’Leary remains positive about his own airlines’ position in the market, albeit remains as out-spoken as always. The purchase of Laudamotion in Austria had given it an Airbus fleet to complement its large stock of Boeing 737s in the Ryanair operation and opened the door to the European manufacturer doing future business with the LCC airline group.

Well, Mr O’Leary has slammed that door firmly shout now, saying the airline is wasting its time talking to Airbus. He told Reuters, the carrier "would not initiate talks with Airbus until such time as Airbus wants to initiate talks with us… Until they need an order from the Ryanair Group, frankly we are wasting our time talking to Airbus".

He has similarly hit out at some of Europe’s legacy airlines racing to their respective governments to get financial bailouts to survive the Covid-19 crisis. In an interview last week with Bloomberg he described Lufthansa as being like a “drunken uncle at the end of a wedding”. He said: “Lufthansa is going around hoovering up state aid like the drunken uncle at the end of a wedding, drinking from all the empty glasses. They can’t help themselves.”

Mr O’Leary has often said that Ryanair Holdings would not turn to state aid to support its businesses, but government bailouts are delivering and even more unbalanced playing field for airlines. “We don’t want state aid, but we’re now being asked to compete with not one hand, but two hands tied behind our back,” he explained in the Bloomberg interview.

Ryanair Holdings will not stand quietly in this predicament though, Mr O’Leary has stated the company will challenge the expected European Commission approval for any Lufthansa aid package, the same will be the case with France’s USD8 billion rescue package for Air France. These will add to existing challenges to the Commission’s approval of French tax breaks and Sweden’s EUR455 million loan guarantees for local airlines.

However, the Irishman has real concerns that such efforts will be in vain, and in another recent interview said that even if such support is deemed as state aid and "ruled illegal”, even then “the Italians will simply say to Alitalia that we don't need the aid repaid anyway, or the French will say we don't want the money back from Air France but the damage will all have been done".

But, the out-spoken Mr O’Leary may need to be a little more cautious about what he says when it comes to passengers to make sure they all feel safe when taking to the air. He famously joked about passengers having to pay to use the toilet’s on aircraft. When Ryanair returns with fuller schedules queuing for toilets will be prohibited on board, and passengers will have to wait for permission from cabin crew to use the facilities.