The Potential Impact of The Coronavirus (COVID-19) and Other News

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By no means could anyone refer to me as an alarmist; however, the potential impact of the Coronavirus (COVID-19) on the global economic marketplace could be significant and it has the potential to dramatically impact how we live our day-to-day lives, as well as, the aviation industry in general.

One can argue that COVID-19 is not anymore dangerous than the common flu – but this is irrelevant if people perceive it to be more contagious and deadly. It all boils down to fear, especially fear of the unknown, and the potential for overreacting, and travelers are especially susceptible. A state of panic can quickly be reached, and if that happens, we can say goodbye to rational thought.

The airline industry is perhaps more vulnerable than many other businesses as the majority of people don’t need to fly but they still need groceries, household items, etc. In other words, travel tends to be discretionary. As many of us may remember, we have seen this before with 9/11 and then, to some degree, with SARS a year or two later. Many people opted not to fly because they were scared of circumstances that were beyond their control. And it took a while for the airline industry to rebound.

Our industry is facing a huge problem, as COVID-19 is moving towards a global pandemic. Some sources have compared it to the Spanish Flu pandemic of 1918 that infected an estimated 500 million people and killed roughly 20-50 million. In fact, Bill Gates refers to COVID-19 as a “once-in-a-century” pandemic . If COVID-19 was restricted to a single region (let’s say Asia) most airlines have the capacity to cope with a region that is underperforming; however, with COVID-19 taking hold in Europe, many of that regions carriers are restricting flights and the ‘alarm bells’ are beginning to ring in regards to the decrease in demand and its affiliated affect on the bottom line. And now it has a foothold in North America as well. If we look at the current problems the Asian carriers are facing, we can see how bad this could get. In fact IATA is forecasting that the Asia-Pacific airlines could lose roughly $28 billion in revenue during 2020 as a result of the virus.

How might the airline industry react? To address the traveler concerns, airlines may begin to clean the domestic/short-haul aircraft more thoroughly, implementing similar procedures like they do now for long-haul flights – disinfecting after each flight. Alterations to the inflight service by reducing the amount of interaction between the flight attendants and passengers could also been seen on some carriers. Also, the airlines may dramatically discount fares in an effort to increase demand and fill seats. And to further align supply/demand, we could easily see airlines park some of their jets, especially older and less fuel-efficient models.

On another front there is a broiling dispute between airlines and the CDC. In the USA there is increasing pressure from the CDC on airlines to assist with the efforts on controlling the spread of COVID-19 by providing more complete passenger data about international travelers. Airlines have responded that collecting this information is the responsibility of the federal government. It is reported that airline executives are to meet with Vice President Pence tomorrow on the subject of the coronavirus. It will be interesting to watch how this unfolds and to see the long-term impact this sort of information gathering will have. Like so many things, once these types of procedures are in place, they rarely are removed.

However, the results of the COVID-19 might help Boeing. With a decrease in the number of people traveling and a reduction in the number of routes being flown, one could argue that the airlines that have been hindered by the grounding of the MAX may be happy its return to service is delayed.

As with any crisis, there is a trickle down effect to other industries and IFEC will most probably be impacted by delayed deliveries and/or order cancelations. Much depends on how long the rate of infection continues to climb. It is too early to truly understand what the basic reproduction number (R0 = the number of individuals statistically to catch the disease from 1 individual) of the coronavirus but as of mid-February it appears to be similar to flu.

The questions we face are: How to move forward? How do we adjust to weather the storm that is COVID-19? What changes do we make in order to not only survive, but possibly, thrive?

One IFE company in Ireland has already filed for bankruptcy sighting COVID-19 as the culprit and they may well not be the last.

Below are some hyperlinks that are both interesting and informative. If you only have time to read one, I highly recommend, “Coronavirus On The Latin Bridge”.

 

Using Big Data to Fight the COVID-19 Epidemic in China

Just How Contagious is COVID-19? This Chart Puts It In Perspective

Global Cases of COVID-19: John Hopkins CSSE

Recession Fears Are Rising Globally


ASTRONICS

Astronics Corporation Reported their 2019 Fourth Quarter and Full Year Financial Results. Below are the highlights:

Fourth quarter sales of $198.4 million; full year sales of $772.7 million
• Consolidated orders for the quarter were $156 million
• Fourth quarter net loss of $34.1 million includes restructuring and impairment charges and legal reserves totaling $51.7 million
Backlog at the end of the year was $360 million


AXINOM

Continuing with its initiative of standardization in digital aerospace, Axinom has become the first digital solutions provider in the industry to provide a production common media application format (CMAF) with cipher block chaining encryption (CBCS). The technology eliminates the need for a native app and multiple file-formats to deliver the video content to mobile devices that can utilize browsers and DRM protection for playback.

The first successful adoption by a notable industry-leading integrator came in the form of a streaming solution that utilizes Axinom VIP (Video Ingest and Processing) to encode and package video assets in the CMAF file format. “The CMAF format paired with the common encryption scheme makes the assets interoperable across device platforms while maintaining industry-grade security,” says Ralph Wagner, CEO, Axinom. “This is a crucial step in our initiative to bring standardization in the digital vertical of the aerospace industry.”

Advancement in on-board entertainment delivery:

Smart and portable devices have become a crucial part of consumer experience and adopting this trend to aerospace not only enhances the value but also makes digital operations more efficient. A multi-screen IFEC offering with modern technological solutions allows passengers to use whatever devices (bring your device scenario) on-board to consume entertainment or connectivity.

Today, Axinom’s product-stack is enabling companies across aerospace industries to leverage the multi-screen trend. Advancement brings forth the following capabilities:

  • Axinom VIP encapsulates the video assets into a single format that is compatible with both HLS and MPEG-DASH streaming
  • Axinom VIP with CBCS mode common key encrypts video assets, described in either an m3u8 (HLS) or MPD (MPEG-DASH) playlist
  • Axinom DRM (Digital Rights Management) delivers licenses to on-board devices for content protection and playback

Providers are also realizing cost benefits as the new solution eliminates the need for an app, multiple file-formats, and vast amounts of space for the storage and playback of videos. Moreover, the comprehensive solution extends to a large number of commonly used devices and platforms, making it extremely practical.


AIRBUS

Aeroflot, the Russian flag carrier and member of the SkyTeam alliance, has taken delivery of its first A350-900, becoming the launch operator of the latest generation widebody aircraft in Eastern Europe and CIS. Aeroflot’s A350-900 features a distinctive new livery embracing its almost 100 year heritage. Aeroflot has a total of 22 A350-900 aircraft on order and operates an Airbus fleet of 126 aircraft (107 A320 Family and 19 A330 Family aircraft). Aeroflot’s A350-900 features a brand new elegant cabin design, offering a spacious three-class cabin layout with 316 seats: 28 private Business Class suites with full-flat seats, 24 Comfort Class with extra legroom and 264 Economy Class. In addition the latest generation Panasonic eX3 in-flight entertainment system, HD screens and Wi-Fi connectivity will ensure enhanced experience for all passengers on long-haul flights. Aeroflot will operate its A350-900 from Moscow to a number of destinations including London, Dubai, New York, Miami, Osaka and Beijing.


BOEING

Boeing  named Susan Doniz as the company’s chief information officer and senior vice president of Information Technology & Data Analytics, effective in May. She will succeed Vishwa Uddanwadiker, who has served in an interim capacity since October 2019. In this role, Doniz, 50, will oversee all aspects of information technology, information security, data and analytics for the world’s largest aerospace company. She also will support the growth of Boeing’s business through IT- and analytics-related revenue generating programs. She will report to Boeing President and CEO David Calhoun, serve on the company’s Executive Council and be based in Chicago. Doniz joins Boeing from Qantas Group, where she has served as Group chief information officer since January 2017. In that role, she oversaw technology innovation, development and integration, digital capabilities and cybersecurity across the Group’s companies, including Qantas Airlines, QantasLink, Qantas Loyalty and Jetstar. Doniz has more than 25 years of global technology leadership experience, including strategic roles at SAP, Aimia and Procter & Gamble. She holds a bachelor’s degree in applied science and engineering from the University of Toronto, and serves as vice chair of the Digital Transformation Advisory Council of the International Air Transport Association.


OTHER NEWS

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