COVID-19: Recovering from disruption; placing consumer needs at the heart of future transport operations

First to be impacted and last to recover. The transport sector was amongst the first to feel the swift and devastating impacts of the COVID-19 pandemic and will likely be the last to recover.

Transportation in the simplest form aims to bringing people together locally or internationally; this is a significant threat to the lockdown and social distancing measures in place globally to kerb the spread of the virus.  

Heathrow CEO, John Holland-Kaye stated that social distancing at airports is “physically impossible” (BBC, May 2020) 1 and TfL have confirmed that public transport will currently be unable to maintain pre-Covid volumes due to social distancing. Making a recovery in the sector will be challenging until travel is seen to be safe again. For all transport operators this reduction of demand poses an existential threat to their business, with impacts likely lasting years, as stricter global regulations and emerging customer attitudes and needs.

Transport operators and governments are looking to navigate the way ahead, with many searching out new and different operating models. 

Future Customer Needs

At Moorhouse, in order to respond to this context and find a way forward, we have created three personas as customers. This approach can help define a response strategy, or understanding for how the ‘new future’ transport sector should react. Through defining their needs before, during and after Covid-19, it helps articulate how organisations could respond.

Based on these persona’s needs, we have identified a number of themes for the post-covid traveller:

  • Increased flexibility due to any further future concerns 
  • Knowledge of how the journey / experience will change
  • Clear and concise information and messages
  • Future travel options and the requirement for competitive pricing
  • Increased awareness of sustainability and the travel industries ipact 
  • Operators which cater for individual needs with a personalised service
  • Increase in safety and sanitation measures
  • Certainty over the future with real time information
  • Preparedness for future disruptions

Steps for Recovery

Anne, Barney and Cole’s needs provide one view of context to the challenges faced, and there is no doubt that global trends, Government regulation, and country to country bi-lateral agreements will also shape the industry of the future.  So, what path could operators and the wider sector be taking now to meet the new customer needs? We currently see four stages:

1. Survive:

Across the industry due to minimal demand caused by lockdown measures, revenues are falling to new lows: 

  • $314 billion loss in revenues for Airlines passenger revenue, IATA 2 
  • TfL face a financial impact of £500m due to Covid-19, Simon Kilonback (TfL Mar 2020) 3
  • Midland Metro is losing £1m a month during the crisis, Laura Shoaf TfWM (Guardian, Apr 2020) 4

Transport operators are currently trying to survive. Reduction in costs, and right sizing the business is vital to maintain cash, as is seeking new lines if finance and government backed schemes. During Covid-19 we have seen assets repurposed for other revenue generating opportunities, like commercial aircraft shipping cargo, the same principles should be applied to other dormant assets.

Our personas Barry and Cole have shown that there will still be the appetite for travel, albeit with an increased understanding that travel won’t be the same as before. As travel restarts, operators should be careful to maintain the capabilities they require to plan and execute the recovery for these first travellers. Organisations should use innovative and agile delivery  combined with strong customer insight and communications to reassure staff and customers during the surviving stage.

2. Develop brand confidence:

As transport operators adjust, there will be a requirement to maintain their original brand. In particular, Barry our business traveller has shown how business travellers want to maintain their corporate travel and the benefits that loyalty brings. These operators should:  

a. Protect their brand: communicate with hyper-transparency and empathy to reassure customers and staff of the action taken. Our personas need messages which are clear and simple to cut through the waves of information; communication should be a service and not a sell.  As travellers like Anne head to digital channels to change or check, these customers need helpful pragmatic advice, instead of sales messages. 71% of customer agree that if they perceive and organisation placing profit above people, they will lose trust in that brand forever (Edelman Trust Barometer, March 2020)5

b. Build trust: focus on building empathy with the situations most people find themselves in now. Anne, Barney, Cole and many other customers have been impacted, so connect with the people and not the infrastructure. 82% of people indicated they started using a new brand because of innovation or compassion that has be demonstrated. (Edelman Trust Barometer, March 2020). Qatar airways ran a “taking you home” campaign showcasing their efforts and impacts to repatriate people. Furthermore, messages should describe what the future looks like for travel, to give early insights to customers on innovative new practices and the collaborative nature that an operator is taking to fight through the pandemic.

3. Model the future:

Transport operators need to assess their recovery options; considering global trends, regulation and emerging customer sentiment and needs. Businesses must work collaboratively with Governments through changing restrictions and policies.

Government policy will not be the only limiting factor, customers too.

Organisations will need sufficient capability and should use technology to complete scenario planning of their future business models. Their models should consider:

Future regulations: As regulators looks to introduce different regulations across different jurisdictions this will change the previous ways of working.
Finance: Models should include flexible pricing, which are able to tailor to the individual’s customer’s needs.
Partnership models: Businesses needs to build powerful alliances with other transport bodies in order to support and grow together e.g. tourism boards, hotels.

4. Prepare the future organisation:

The recovery profile will likely be unstructured and changeable. Across the transport sector businesses must be open to agility across strategy, operations and supply chain. Agile leadership teams should be prioritised and formed to take emerging strategies into a series of actions. 

Customers’ needs have changed at almost every journey touchpoint, re-mapping the journey is a priority to support building future operations. New social distancing practicalities in airports/stations, health screening, queue management, increased sanitation will all be new domains that will need to be executed.  

Through modelling, these new needs should be well positioned to win business when recovery commences. Rapid development of solutions for the good of the customer will come from collaboration with the supply chain and partners, which will be a challenge for the sector. 

For example, will we see options to purchase extra seats or space onboard and train or aircraft for nominal amounts?  Will tickets include comprehensive insurance to cover not being accepted to travel? The ability to bring new products to market that address customer needs will become a differentiator and build trust for a successful future organisation. 

React to the customer’s needs now 

Moorhouse are already implementing the steps for recovery approach within the transport sector. Whilst working with an industry body we have demonstrated the need for honest and open communication on programmes that are delayed. This has been combined with an agility in approach by changing existing programmes timelines and areas of focus to meet the defined customer’s needs. 

Transport operators should right size and protect cash now, communicating with staff and customers with utmost transparency. The customer’s needs must continue to be placed first with operations following, though clearly in a safe manner.

References:

1: https://www.bbc.co.uk/news/business-52504183

2. https://www.iata.org/ 

2: https://www.railjournal.com/passenger/metros/tfl-says-coronavirus-could-cost-500m-in-lost-revenue/

3. Simon Kilonback (TfL Mar 2020)

4. https://www.theguardian.com/business/2020/apr/20/uks-regional-light-rail-services-at-risk-from-coronavirus-outbreak

5. https://www.edelman.com/research/2020-edelman-trust-barometer-special-report-coronavirus-and-trust
 

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Authors

Matt Coghlan

Principal

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Kate Masters

Senior Consultant

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Joel Evans

Senior Consultant

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