Realign and rationalise'
out of the business of credit because that is what is putting stress on airlines,” he said.
According to Kaul, there will be consolidation across the travel and aviation sectors. “We have too many travel agents, I don’t think some of them can even be called travel agents. I think, before we talk about what their business model is, we need a lesser number of travel agents. Somewhere, the associations need to relook at their membership. The change must start by rationalising the number of travel agents in the country. There should be stricter norms to be a travel agent, otherwise there will be less entry barriers in the industry and we’ll have travel agents who keep spoiling the industry. Travel trade associations must relook at whether they need so many travel agents. You can’t have thousands and thousands of travel agents. That’s not going to work. There is a possibility that there would be no airline commissions or GDS commissions may drop (If NDC comes into effect in June) for travel agents in the recovery phase post COVID-19 crisis. You may need to take that call earlier to avoid taking drastic measures suddenly. I urge TAAI, TAFI to look at their membership and restrict the qualification to be a travel agent,” he said.
A plan of action for travel agents
Billa says that they should engage and utilise the time significant amount of rethinking. “I think, that’s a million-dollar question. There is no doubt that the value chains will get rationalised and optimised. We closely need to look at the value proposition we bring to the table and see how that value will drive our systems into the future. I don’t have a solution, but I know that there will be a significant amount of rethinking. The government will of course work to support businesses. The underlining is going to be that what value you bring to the table and if you can protect that value and enhance it, there is nothing that can take your business away.”
Kundu feels that the entire model of Indian tourism business must be redefined and reengineered. “I reckon that we have a lot of travel agents in the country. Larger and better travel companies get compromised due to that. I think all the associations put together have to go the government and say you cannot give us a tourism regulatory authority but at least give us a tourism regulatory council where we can create an entry barrier for travel companies. Unless and until you create entry level system in the industry for a travel company, it
is difficult for the entire industry to transform. We need to use this period to consolidate the industry, shrink the size of the travel companies and the business has to come back.
Kaul says that airlines need government support in terms of a bailout package at the earliest so that they can support travel agents and continue working closely with them. “Most airlines almost have no cash flow or no excess cash reserves. The revival of airlines posts COVID-19 crisis must be conditional based on international best practices. They need to have the cash for 2-3 months to function efficiently. The global value chair across all sector is going to be remodelled. The agents should look at how they can sharpen and improve their products, " he said.
Are India’s tourist source market going to change?
Billa feels that India cannot completely rely on the traditional markets. “I think for now, we need to think, whoever brings in business to the industry is good for us. It will also depend on travel restrictions and regular flight operations coming back. I think, we need to completely, reorient ourselves, I think, wellness tourism is a big opportunity for India. There will be a lot of people who would want to come to India to rejuvenate. In the short term, I believe the government needs to come forward and show a lot of marketing efforts to create B2B opportunities for people since the whole world will be scrambling for markets which gets opened up first. We need to be very aggressive and first of the block. From UNWTO’s point of view, it will take almost 7 years to come back where we are.”
Tourism will get back on track soon
Kundu feels that 180 days from March 1st, things will start getting normalised. “It’s not going to be normalised, but people will move. Once the vaccination comes in, it will be business as normal. We need to evolve ourselves. We need to become the growth drivers for the industry,” he said.
Impact on domestic aviation market
Kaul feel that domestic aviation will kickstart first. “It will start earlier and come back to normal operations very soon. Airports like Changi have taken a decision to lockdown for 18 months. The revival of international aviation is going to be more challenging as compared to domestic. The industry globally will need to rightsize. Some of the Indian routes may be having volumes and load factors to 80-90 per cent but it doesn’t make any money for them. So, possibly, some airlines will suspend operations to India temporarily. So, non-profit routes are likely to be closed.”
Airline merger possibilities?
Kaul says that at this stage, he is very sure there will be mergers. "The consolidation we see is perhaps some airline exiting the market. Airlines might close some non-profit routes," he adds.
Relooking at distribution channel
Travel industry is going to bounce back, the only questions is when? How much time it takes? Kaul says, "In the long term, India will need flights to US, UK and other far away countries. I think the short-term impact will be to cover the immediate loss. But airlines will include wide body and narrow body aircrafts in their plans. The reorientation of distribution through online is going to continue and this challenge prompt airlines to sale directly on internet, on their website. As airlines look to restructure, they will have really less resources and cash to handle. I don’t think the distribution will change. It will remain the same. It’s with travel agents to evolve, how much they innovate and provide more value to the travellers. Entire ticketing business for a period of time will have to be relooked."
Future of travel start-ups?
Analysing the situation, Billa said, out of all travel subsidiaries, the products and portal which can provide required possible solutions to the industry are going to do well. Such travel start-ups will rise, especially the tech-based companies are expected to do well. These companies will bring solution for the travel industry.
How can we beat this virus?
According to all the three speakers, the industry needs to put its act together. Everyone needs to work very closely with the government. When everything is linked up together, there is greater synergy. The most important
thing during this time is that we don’t lose consumer confidence. The mantra is to have a concerted approach towards issues and the government, private sector and everyone else comes together to fight this virus.
There is a need to be extremely focused and extremely aggressive in the marketing approach when the situation normalises. A strong public private partnership is what will help. All the B2B events, roadshows must be supported by the government in a big way. Prejudices for certain countries with whom India did not used to do business has to be removed. Whoever brings tourists, economic value to the country is good for us.
According to all the esteemed speakers, the government will not shy away from handholding the industry but beyond that time has come for some very hard thinking to take place. Travel agencies need to look at their choices and reprioritise. Government has to step in and support them. Hopefully, tourism will come out stronger and better after this phase is over.
Trade seeks answers and opinions
Answering the queries of attendees, all speakers shared a detailed blueprint of the situation and suggested ways to tackle it.
Q: What is going to be the new code of conduct for the industry?
Response from Billa: An uncertainty for tourism is how long this crisis will last. Social distancing is for sure going to continue, because of which restaurants, meetings, conferences will get affected. Notwithstanding, I am optimistic that there will be something which will come out to resolve this. The big challenge is going to be that what kind of business will do better in the short term.
To my mind, for a country like India, we will have to fall back strongly on domestic tourism. For inbound tourism, there will be fear for people to come to India. Every country will lift travel restrictions at a different level, depending on their respective level of progression in combating the pandemic.
The second point is how we look at wellness and yoga tourism. There is going to be a whole lot of interest around self-care after all the trauma the world has gone through. The biggest challenge is how to sustain the sector itself. Tourism is going to be extremely challenging. If we account for 45 million jobs in India, I reckon that a large part of that may be challenged if we do not come back to where we were.
Q: What impact will COVID-19 have on M!CE? Response from Kundu:
In the M!CE sector, what was happening will keep happening; people will keep having meetings digitally. But, M!CE is one industry that is never going to die down because it’s completely experiential. There will be a price realignment of tourism products globally. Initially, prices will come down for a while and then they will stabilise.
Travel has to be made cheaper, but agents should not be selling cheaper tickets anymore. The first thing that will recover in tourism will be M!CE. People will have to get their groups together. People will try to create an optimistic view about their businesses. They will have to begin M!CE movement on a particular platform. There may not be large trips, but it will definitely be a complete readjustment, primarily within India because India is an ideal place for M!CE. Why send our groups outside? Of course, we don’t have large infrastructure available, but M!CE will come back and this will throw up a long-term opportunity for us to develop and speedup infrastructure development in India. Cost realignment is practical and very important for this industry.
An uncertainty for tourism is how long this crisis will last. Social distancing is going to continue, because of which restaurants, meetings, conferences will get affected. I am optimistic there will be a solution
– Suman Billa
The private sector needs to come together and redefine, realign and reenergise the entire industry. I don’t think we need to rely on any external factors. It is important to understand the behavioural change
– Naveen Kundu