Abu Dhabi, UAESunday 25 October 2020

Departing Royal Jordanian CEO sees more airline consolidation with regional travel set for faster recovery

Weaker airlines are expected to exit the market, with possibly more regulation being introduced after the pandemic

Stefan Pichler, the outgoing chief executive of Royal Jordanian, says there will be consolidation in the market as weaker airlines exit. Bloomberg
Stefan Pichler, the outgoing chief executive of Royal Jordanian, says there will be consolidation in the market as weaker airlines exit. Bloomberg

Local and regional travel is expected to recover before long-haul routes, in line with the International Air Transport Association’s projection of a full recovery in 2024, according to Royal Jordanian’s departing chief executive.

Stefan Pichler, 63, who announced his retirement in September, told The National that the aviation industry is on course for consolidation.

“In terms of market segments, we would expect to see the visiting of friends and family come back first, followed by tourism and the business travel will probably take a longer time to come back to 2019 levels,” he said.

“Having said this, I would assume that both Emirates and Etihad, as connecting network airlines, are in a pretty good position to use the current crisis and the recovery patterns to their advantage. Some other airlines with a stronger focus on point-to-point traffic will suffer for a longer period of time – if they survive.”

The Covid-19 pandemic has disrupted the travel and tourism industries and tipped the global economy into a ­recession.

Several airlines have either furloughed their workers or cut jobs to cope.

About 4.8 million industry jobs have been lost or are at risk as countries restrict air traffic to curb the spread of the pandemic.

Many operators received billions of dollars in state aid but are increasingly facing operational challenges due to a weak travel outlook.

Iata last month downgraded its traffic forecast for this year from 63 per cent to 66 per cent.

Mr Pichler said the aviation landscape and the travel industry will change after Covid-19 due to consolidation and the exit of weaker airlines.

“We might also see a bit more regulation in our industry as the governments of most of the countries had to bail out their airlines to save jobs, infrastructure and market access, as well as ensure future gross domestic product development,” he said.

“And, with the bailout money, you buy influence.”

Mr Pichler said remote working will probably continue in the future, having worked well in some areas of the industry during the crisis.

“This will go in parallel with more outsourcing of non-core airline functions,” he said.

Mr Pichler, who has a record of turning airline fortunes around, has led six operators over the past 25 years. They include Air Berlin, Fiji Airways and Jazeera Airways, as well as stint at the helm of the Thomas Cook Group.

“Some of it was about growth but some of them were ready for immediate turnaround,” he said.

“Some of them like Jazeera Airways were great low-cost airlines, some like Thomas Cook were more legacy. So, it has been an exciting journey, not only through different business models but also through different cultures.”

He said the main takeaway from his career was his ability to communicate with people in the organisation.

“[When] you start your business career, most of the time you focus on your functional expertise and the numbers to guide your decisions,” Mr Pichler said.

“People sometimes tend to lie; numbers don’t.

“If you lead companies as a [chief executive], in reality you lead people much more than you manage numbers, and the need of human beings to be respected, to have nice colleagues at work and a stimulating work environment [is] the same all over the globe.

“So, the biggest lesson for me was that in order to achieve anything in my job, I have to be truthful, real and inclusive to and with all the people I was working with.”

Updated: October 13, 2020 01:03 PM

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