COVID-19 and the impact on business - A BLACK SWAN OR THE ULTIMATE BUSINESS DISRUPTOR?

Honestly. From a personal perspective, what were your thoughts first time you heard of covid-19?

You’d heard of MERS, SARS-1, Ebola. All geographically distant, far away events, yet seriously hurting epidemics impacting on societies in Asia or Africa. Not that dispersed, really.

Hey, now! Stop! What is going on here? Europe, US, Australia, New Zealand, the entire world, too??

Shock is followed by denial. Pictures from Bergamo, Northern Italy, show lines of trucks. They’re loaded with…no, I do not believe that. Come on, we’re NOT in a Hollywood-movie.

In your denial you watch your PM and key government representatives, appearing on breaking news to inform that society, the world and life you knew so well, for good and for worse, will now shut down for an unknown period of time. Metropoles lock down like pearls on a string. New York, Paris, London, Beijing, and counting.

That is now more than half a year ago, and most of us cannot wait to wave 2020 goodbye on New Year’s eve, trying to forget what happened that year. Hoping for a vaccine to bring back life as you knew it. World changed dramatically, and so will the way you lived your life.

While trying as an individual to cope with all the doomsday talk (no worries, mate - maybe things just go back to normal??), it is worth recalling what we left, looking back at the beginning of 2020.

Depending on your situation and where you are in your life, depending on how your business/employer managed to live through this unbelievable, unimaginable, hopefully once-in-in-a-lifetime state of the world, things were generally performing well.

OK! Not all was fine. Trade wars, geopolitical tensions, climate changes, tough competition, loss of jobs to automation and/or economic downturn, digitisation, oil prices, poverty, war, inequality. Many people still suffered before the pandemic.

Still, something changed in our understanding of how to navigate in life. Someone crashed our ontological security, our existential security, our incentive to move into a space without fear. Fear of virus. We want to get out, we want to travel, but that feeling is still haunting our minds.

We are then told to go back home again, and stay there to protect health infrastructures collapsing under the second wave. What does that do to people’s social needs and rewards for interacting, e.g. doing business?

The covid-19 pandemic catapulted existing business strategies and visions into a new paradigm at unseen pace. Whether laggard or leader before, any single business management team faced covid-19 mainly unprepared as it flashed its appearance out of the blue during the early months of 2020.

Without disregarding the grim and tragic human costs, death tolls now exceeding 1 million, the past six to eight months presented the world to the instant and merciless impact to societies and businesses.

Widespread national lockdowns, some of which are either still in effect or partially locking down again from temporary openings during the course of summer. Critical and societal infrastructures shut down in a matter of days or few weeks, paralysing virtually all sectors and industries, citizens alike.

No commercial flights for months, and years before regaining momentum. No transportation of business professional and tourists, hotels closed, millions caught in their homes, massive, trillion-dollar public intervention programs, millions hit by unemployment, and so on. No nothing. WTF happened?

In economic theory, ‘black swan’-events are used to label unexpected, unforeseeable knock-out punches to business markets, carrying massive impact and magnitude that could not have been predicted by scientific models.

Still, once the dust from the storm appears to have settled, an almost cynical fact will grow out of the impact. While covid-19 in all its ugliness forced us all into a new, yet unwanted everyday-life, this whole situation leapfrogged the common understanding of our dependency to socialise, to do business, and so on.

A such, digitisation is no longer a vague or distant, often misunderstood definition adopted by businesses, fascinated by technology promises and increased revenues. Digitisation is knocking your door, and now, it is knocking hard.

Try counting the number of Zoom, Skype or Teams meetings you attended over the past eight months. Phew. A lot, I guess. Then try counting the number of times you either printed a boarding card, had lunch in an airport lounge. Or in a hotel restaurant. Count the number of times you showed up in your office. Not many, if any at all.

It would not—at all—be fair stating that covid-19 in any circumstance added any positive to the well-being of human race. Yet one cannot escape the reality that those businesses prospering from e-commerce enjoyed a very profitable year, despite the fact it happened more or less as a direct result of pandemic restrictions. I spent the past few months working from home, but I still have my job. Not all ended up that luckily.

Imagine covid-19 happening in 1980’es, or 1990’es. What would that have meant to our needs for socialising, business agreements, jobs, life? We didn’t even own a mobile. Maybe we’d be running phone meetings, congregating via old fashioned landline phones, incurring costs beyond imagination, that is, if it did not break down from being over-heated.

Today, thank god, a wide range of sectors and industries, including health (e-consultations), education (online-classes), consumer goods (B2C, more or less any), software to facilitate co-operative platforms (B2B), remain parts of your everyday life. Due to covid-19, they experience unseen growth digits. Maybe, you know these two: Amazon.com or Zoom Video Communications (zoom.us).

The former eventually increased its market value by the billions in 2020 alone (dry facts of the matter!), essentially showcasing the true magnitude of uncertainty millions of customers are staring into.

You can always survive shopping online, you do not have to leave home, purchases delivered at the door. Am I to blame Amazon for this?

The latter soon proved of the most popular video meeting platforms, truly emphasising that you do in fact have an alternative to travel. Am I to blame Zoom for this?

Stay home (because you’ve been told to) => that is, now that you have an alternative, save the money intended for a flight ticket and a hotel bill.

Let’s look into another example.

I remember way back when—even before calendars flipped Y2K—commercial flight carriers viewed online meetings a dead serious ingredient of doing their SWOTs to stay in competition, obviously scared that companies would keep personnel at home base and away from costly seats on-board planes.

Nonsense? US-based Bureau of Transportation Statistics (BTS) documented only a few years ago that “…U.S. airlines and foreign airlines serving the U.S. carried an all-time high of 1.0 billion system-wide (domestic and international) scheduled service passengers in 2018, 4.8 percent more than the previous record high of .965.4 million reached in 2017….”.

Then came covid-19, prompting IATA (International Air Transport Association) earlier this summer to predict that commercial flights won’t go back to pre-2020 momentum until 2024, and—btw—one year later that first announced.

Almost at the same time, BTS reported that ”… U.S. airlines carried 2.9 million system-wide (domestic and international) scheduled service passengers in April 2020, seasonally-adjusted, according to the Bureau of Transportation Statistics’ (BTS), down 92.2% from March….”.

These facts don’t even include how hurt the hospitality industry ended up. Not just in US, but worldwide. Same for airlines, btw.

According to Investopedia.com (July 2019), “…business travellers account for 12 per cent of airlines' passengers, but they are typically twice as profitable. In fact, on some flights, business passengers represent 75% of an airline's profits”. This number is a share of the total 60 per cent airlines receive in income from passengers directly.

…!!

So….?

What is the impact of covid-19 to long term air passenger behaviour? While leisure travellers will most likely swarm airports once travel restrictions terminate, business travelling may have a different incentive.

Despite today’s fancy technologies to promote brands and make lives easier to business air travellers, e.g. like loads of apps (travel industry is in fact one of the leading app suppliers, at all), AI, IoT, etc, companies may simply find themselves financially and strategically adapting to a different post-covid-19 reality than airlines expect.

In turn, they may—at least in the short run—introduce/pro-long new and stricter travel policies for reasons of (still) being financial constrained or simply having conveniently adopted cheaper and more advanced communications platforms. Fewer employees will be travelling, and typically only at managerial level. Regular staff members run meetings online.

Along with continued uncertainty about fuel prices, aforementioned scenario is likely to accelerate a consolidation in air passenger transportation; i.e. those airlines surviving while actually enduring the pandemic, will have to redo strategic planning for staying business beyond covid-19. Many airlines already started this journey, and many already laying off thousands of employees. Some to survive in the short run, others as they believe in their continued existence in a highly competitive business environment.

Covid-19 is not a direct disruptor to business in its own nature. Disruption was already here before. We just thought that we were in control of how to manage the path to a smarter life, connecting everyone, automating everything, predicting the world. I admit, millions either lost their jobs, or faced the threat of losing to smarter ways of doing business.

But no scientific model managed to predict the covid-19 pandemic. A black swan, accelerating our pace into socialising and trading almost everything in cyberspace.

Recall my words on visualising a pandemic having happened in 80’es or 90’es?

I do not feel inclined to describe the impact of such a scenario, and I am not sure whether this makes any relevance at all. Today, I praise technological leaps and the very fact that you and I and the rest of the world are in fact able to communicate spite all the misery.

I am truly a big fan of digitisation, and how it allows people to share value and wealth, and when under attack, we can still meet, view and talk to our families, our friends, our colleagues.

But we cannot touch them in their cyberspace presence. That makes me sad, on my own behalf and on the behalf of the younger generations believing in a future, and released from the fatal uncertainty of meeting peers.

I am not a doomsday preacher. Definitely not. In fact, I am a steadfast optimist on behalf of my fellow human beings. I trust in science, knowledge, real facts and human spirit to showcase the power to bring down the enemy. The virus.

Yet I am not na?ve, there’s another world waiting for us out there.

Thank you, for reading.