01 Jun Accelerating COVID-19 recovery in the travel and transportation industries
By Dee K. Waddell, Global Managing Director, Travel & Transportation Industries at IBM
“It is not the strongest species that survive, nor the most intelligent, but the ones most adaptable to change.” –attributed to Charles Darwin
The experience of governmental lockdowns, self-isolation, quarantines, social distancing and other important measures to protect us from COVID-19 weighs heavily on us and continues to impact each of us personally and professionally. We have all seen the devastating and ravaging effects of the COVID-19 pandemic on an unprecedented global scale—especially in our travel and transportation (T&T) industries.
In the Airline, Travel and Tourism sector, with severe travel restrictions and extensive border closures, demand has plummeted to almost non-existent levels. In the most recent World Travel and Tourism Council Analysis, revised forecast models are showing global sector impact of over 100 million job losses and nearly USD 2.7 trillion GDP losses to the world economy in 2020. Never have we seen such a grim near-term outlook.
In the Transportation, Freight and Logistics sector, even with the classification as critical infrastructure throughout the world, we have seen steep declines in demand and capacity—as much as 20-30 percent in some forecasts. And with uncertainty looming in consumer and business spending, manufacturing confidence, and trade-lane bottlenecks, on top of global job losses and economic contraction, the risk of categorical deglobalization is real. Forecasting future demand and capacity requirements is nearly impossible.
However, as our T&T industries are tightly coupled with all aspects of critical infrastructure, global peace and prosperity, there is no doubt we will recover. And as leaders, it is our responsibility to adapt quickly, accelerate the recovery and emerge even stronger in the next normal.
Trust is the new currency
Trust is valuable in all aspects of life, but it cannot be purchased, it must be earned. Leaders in our industries must consider how to reimagine trust models, and elevate ideas and innovation learned from the current crisis. Earning trust with all stakeholders, including customers, employees, business partners, governments, shareholders, and others is critical in the face of extreme uncertainty and can be the only currency worth accepting.
Trust in the next normal is about confidence in actions taken by key stakeholders, particularly customers and employees. Proactive operating models—with open and transparent approaches and activities that bring surprise, delight and deepening engagement—must be sustained and become a dependency for long-lasting credence. For example, in our T&T industries, we are seeing the rapid introduction of public health measures and touchless solutions as a key part of safety and security for building trust. Anti-microbial facemasks, gloves and other protective equipment, along with transparent sanitation techniques and food safety tracing, prep and certifications along with effective physical distancing can bring confidence to customers/passengers and employees. In addition, reimagining the customer journey with touchless (or contactless) solutions, such as AI-based computer vision and imaging, voice and face-based processing, biometric authentication and digital IDs/wallets, automated and robotic self-service, and other innovative approaches will provide significant trust and confidence benefits. Collaboration among industry organizations, associations, governments, and regulatory bodies will also be critical to accelerate trust on a broader industry basis, including developing global standards, common industry platforms and reconciling social and ethics concerns with data sharing, security and privacy.
We also cannot overlook the power of reimagining and/or repositioning existing markets, products, services and internal processes leveraging trust as a key (re)design principle. A clear example of this reimagining is how airlines are leveraging unused aircraft cargo capacity to send medical supplies to critical personnel during this pandemic. In hotels, we see rooms being quickly repositioned for medical workers and recovering patients. Employers are also filling the trust bank with their employees by shifting to virtual work environments, providing honest and open communications; finding tools and solutions in sincere fashion to ensure their long-term health, safety and security. A wonderful example is how some T&T organizations are forming partnerships with critical businesses and organizations to take on furloughed employees for temporary employment.
In addition, our T&T industries must develop reimagined strategies and bold actions in cleaner energy and sustainability. As we just celebrated the 50th Anniversary of Earth Day, it reminded me of the collective challenges we all face and how important innovation and human ingenuity are to us accelerating our triumph over this existential threat. Comprehensive strategies and plans that are proactive, aggressive and possibly unconventional can demonstrate leadership for each stakeholder and must be considered. Innovative trends, such as open and transparent CO2 emissions footprints being embedded into “sustainable” loyalty currencies. Promotions and product offerings that drive customer behavior being pursued are bio-fuels, clean-energy vehicles and heavy equipment, sustainable plastic distribution and consumption, renewable and clean-energy sources with geospatial weather forecasting for heating and cooling, and aggressive elimination plans of emissions for computing systems. The bottom line is our T&T industries must ensure all our efforts and energy are demonstrated in real and trusted commitment to responsible stewardship of our planet (see IBM’s “Good Tech” initiatives).
Beyond resiliency…to business elasticity
The focus in recent years has been about stabilizing and hardening our environments to ensure we can operate effectively in a relatively stable economic and political environment. However, as we have learned through the COVID-19 pandemic, we must go beyond resiliency and reinvent our organizations to drive elasticity in our business models as a fundamental design principle.
Elasticity implies that organizations, cost structures, systems, and business processes must be considered as interoperable capabilities and be able to scale both up and down, in near-real-time, to meet the dynamic changes and demands on the organization. Elastic business models will have a lasting effect in future discontinuity or crises. They’ll help critically address our T&T industries’ high fixed-costs and rigid structures which, during COVID-19, have resulted in unprecedented financial loss and operational impact.
With IBM’s distinct and “maniacal focus” (see Arvind Krishna’s first-day CEO blog) on hybrid cloud and AI, coupled with our IBM services, we are uniquely positioned to help our T&T clients reinvent and build elastic business models and technology capabilities, and “architectures” that can adapt to volatile business environments and demands…up and down.
For example, to reduce operational costs while accommodating volatility of demand and call volumes, and empowering a flexible segment of employees to work remotely, one T&T client set up quickly to utilize our AI and cloud-based Watson Assistant for engaging customers virtually. Leveraging cloud and AI enables organizations to shift and flex up and down as demand, costs and capabilities need to adjust in real-time.
Another example is where IBM Global Financing provided financial support to accelerate modernization and migration of key applications into a hybrid cloud approach, eliminating the dependency on high fixed-cost data centers and extending elasticity into IT operating and cost structures. Other examples even beyond T&T industries can be found on IBM’s response to COVID-19 page.
My personal SARS experience
During the global SARS epidemic in the first half of 2003, I was, like many industry leaders, caught in a particularly difficult situation as a leader and employee of a major US airline. In addition to the SARS outbreak, the industry was also reeling from a number of other challenges, including post-9/11 recovery, bankruptcy (December 2002), Iraq War (March 2003), and a spate of global terror attacks (for example, in Rihadh, Jakarta and Istanbul). Many of the gut-wrenching messages from CEOs to employees and customers—messages about new procedures, liquidity concerns, and the deep uncertainty in demand forecasts—are echoing in our current crisis. But when handled with genuine grace, compassion, and integrity, these messages—even the ones with the most difficult implications—build trust.
The impacts of decisions made in these previous industry crises, however, were devastating. But they were, in almost every way, less severe than what the industry faces today. The extreme uncertainty that airlines and travel companies are grappling with today will leave deep scars and lasting memories. The SARS crisis introduced the industry to travel alerts, but now we have widespread World Health Organization travel restrictions and country border closings.
But even though the previous crisis was less intense, it made a lasting impression on me personally. I remember distinctly which vendor/partners I could rely on because they were in the crisis with me. The people and companies that earned my trust were authentically willing to engage and support with big and bold ideas and innovations in context with the situation. I remember one essential vendor/partner who took on additional risk and went to extraordinary lengths to support one critical customer initiative. As you can imagine, this cemented trust and a long-lasting impression of goodwill.
Here at IBM, we are obsessed with helping the world’s industries and our clients’ response to this global pandemic. We strive in every interaction to be your trusted and essential partner by bringing bold ideas, innovation and assistance to accelerate recovery. It is our honor to be the backbone to many of the critical operational systems and processes in our T&T industries and we will continue to be their most trusted partner in this strategic battle to emerge even stronger.
Please be safe and well with your families and loved ones. This post originally appeared on IBM.com
Learn more from Dee Waddell on aviation recovery strategies by joining our webinar on 30 June:
The next normal in aviation: How do we move forth?
The travel industry’s next normal will be defined by companies that effectively rebuild traveler trust, as they introduce more elasticity into their operations and business models. Airlines and airports can transition from crisis management to effective recovery planning in the following ways:
- Prioritize deep customer engagement that builds lasting trust
- Continue to provide differentiated experiences consistently
- Drive down operational costs with a mix of technologies
- Implement strategies that increase business elasticity and cost variability across all function
Meet the author
Dee K. Waddell, Global Managing Director, Travel & Transportation Industries at IBM