by: Adam Coath On: 27, Apr 2020
The current Coronavirus epidemic has has a profound impact on the Aviation industry. The illness was confirmed as a major cause in the collapse of carrier Flybe, and easyJet and Ryanair are both estimated to have lost 30% and 22% of their value respectively.
Whilst the global lockdown is set to last for the next few weeks at least, international Aviation organisations large and small have shown throughout history that the industry can return from crises and difficult situations. Here are four examples of airlines and Aviation bodies bouncing back from hardships to regain success.
4 Aviation Companies that Came Back from the Brink
- United Airlines – PR Disaster
In April 2017 United Airlines suffered major brand damage following a PR disaster that saw security officers forcibly remove a passenger from a flight in Chicago. 69-year-old Dr David Dao, who refused to give up his seat to crew on an overbooked flight, lost two front teeth and suffered a broken nose. The incident was captured on film and shared around the world.
Despite the fact that the airline did not remove Dr Dao – this action was taken by a Chicago police officer – United received the majority of the blame. The video footage shot by passengers received over 2.5million mentions across social media in the three days following the event and was seen by 700million people worldwide. United’s social media reputation an engagement was 91% positive during the days before the incident, switching to 68.9% negative on the day after the footage emerged.
United CEO Oscar Munoz issued an apology, ending with the acknowledgement that the company’s “policies got in the way of our values and procedures interfered in doing what’s right”. He declared that the incident provided a “turning point for all of us at United and it signals a culture shift toward becoming a better, more customer-focused airline”. Whilst United received fierce criticism from the press and national bodies as well as public outcry, the company made significant long-term changes in response to the incident, including:
- Revolutionising its employee training programmes to operate a customer-first ethos
- Aligning executive pay to customer satisfaction levels, in an effort to focus on passengers before profit
- Paying $10,000 compensation to any passenger asked to give up their seat
- Refraining from asking boarded passengers to give up their seats, except in the case of a safety or security issue
- Creating a “customer solutions team” to assist gate agents to get fliers to their destinations and find alternatives to displacing passengers
- Delivering monetary compensation and extra miles as quickly as possible through a new app
- Adopting a “no-questions-asked” policy for missing baggage, with a guaranteed $1,500 compensation for each bag and its contents.
United’s efforts to recognise the flaws in their processes and subsequently improve them saw revenue increase from £37million to over £41million between 2017 and 2018. United remains the third largest airline in the world.
- Lufthansa – Germanwings Crash
In March 2015, a Germanwings aeroplane crashed into the French Alps, killing all 150 people on board. The subsequent investigation ruled that the cause of the crash was a deliberate attempt by the co-pilot of the Airbus A320-211 Andreas Lubitz.
After reports emerged that Lubitz had previously been treated for depression and suicidal thoughts, and had informed his training school of his mental health, the European Commission drafted new rules on pilot mental health, which now require airlines to carry out a psychological assessment of pilots before hiring. All pilots are now to be provided with a mental health support programme.
Following the tragedy, Lufthansa Group alongside many other German airlines implemented a policy requiring that two authorised individuals must be present in the cockpit at all times. Whilst Lufthansa had already used psychological testing for its pilot recruitment programmes, the airline publicly welcomed the rule changes, which also include mandatory random alcohol testing for all European carriers and additional testing of flight and cabin crew for psychoactive substances.
- Delta Airlines – Bankruptcy
Following the terrorist attacks of September 11th 2001, several major airlines struggled to adjust to the combination of reduced passenger demand alongside rising fuel costs. In 2005 Delta Airlines filed for bankruptcy. However, all was not lost: the company spent over 18 months reviewing organisational structure and identifying ways of cost-cutting and operational changes to sustain the business.
Whilst the bankruptcy of other Aviation providers has historically led to mergers, aggressive takeovers or collapse, Delta took the opportunity to revolutionise the company and its services. Delta rebranded, began to fully utilise its Atlanta hub – the biggest single airline hub in the world – secured routes into China and the UK and started building a trans-Pacific hub, enabling it to rapidly expand to serve 210 destinations globally.
The carrier exited bankruptcy in 2007 after losing 6,000 staff members to reduce workforce costs by $1 billion. In 2005, Delta had revenue per available seat mile that was 86% of the industry average. By Q1 2007, RASM was 96% of the industry average.
- Icelandic Ash Cloud – The Industry
The 2010 eruptions of Icelandic volcano Eyjafjallajökull caused major disruption to all flights across western and northern Europe throughout April and May 2010. In response to concerns that volcanic ash ejected would damage aircraft engines, many European countries closed their air spaces in the largest air-traffic shut-down since World War II. The closures stranded millions of passengers across the world and caused disruption and loss for many airlines and airports globally.
IATA estimated the total loss for the airline industry at US$1.7 billion and the AOA estimated that airports lost £80 million from the cancellation of 107,000 flights.
In response to the crisis, airlines and airports worked together with Governments and other transport providers to find alternative routes for stranded passengers. UK Government ministers created a plan to transport passengers by sea back to the United Kingdom, and Britain’s cabinet crisis response committee (COBRA) utilised Royal Navy ships to repatriate stranded British travellers. Irish and European transport bodies collaborated with Aerospace leaders to run additional Eurostar and other repatriation services.
Following the impact of the ash cloud, transport ministers from the European Union agreed to speed up plans to unify control over the region’s airspace: the Single European Sky. The EU drew up detailed guidelines on safe levels of contaminants in the air, ensuring best practice advice in the event of similar environmental situations, and setting in motion conversations about the Aviation industry’s impact on climate change and how to address them.