A government bailout always helps, but the recovery of Portugal's home airline points to the benefit of serving resilient markets in South America and Africa.
Portugal’s early successful vaccination rollout, allowing it to reopen sooner than its neighbors, has turned the destination into a favorite in Europe. But the country’s tourism rise has coincided with the airline’s steady recovery path — amid a government-funded restructuring and ongoing pandemic uncertainties.
“Our capacity for this winter is already at 80 percent compared to 2019, and we are expecting to see a similar trend for next summer,” said Christine Ourmières-Widener, CEO of TAP Air Portugal, at Skift Aviation Forum on Wednesday. “We didn’t really do significant changes in our network as far as the region we serve. It’s more we have been playing with frequency and the type of aircraft we are flying to some destinations.”
The airline’s demand curve also varies from the rest of European carriers, Ourmières-Widener told Madhu Unnikrishnan, editor of Airline Weekly, in explaining TAP Air Portugal’s competitive edge, in spite of European low cost carriers’ presence in Portugal.
Not serving Asia, for example, and flying to Brazil earlier than North American carriers — the airline’s second largest market outside of Portugal, with a significant increase in bookings coming in — meant dealing with fewer border restrictions and hurdles.
“Brazil is a booming market,” said Ourmières-Widener, while adding that Brazilians are not currently able to travel to the U.S. because of the significant visa processing backlog, but that they are heading to Europe. Of the 11 destinations in Brazil that TAP Air Portugal flew to pre-pandemic, 10 have returned for the winter season, albeit with lower frequencies. The North American flights, including to JFK and Newark, are being restored now that the U.S. has reopened to all vaccinated travelers.
The return of travelers comes as the airline is undergoing a restructuring that’s focused on adjusting capacity, reducing costs, improving the balance sheets given the debt incurred during the pandemic, and increasing efficiency on the revenue side. The latter has meant addressing customers’ significant increase in expectations when it comes to having a digital experience, TAP Air Portugal’s Ourmières-Widener said.
“So how can we improve this full digital experience for our customers, but also how can we optimize our distribution structure that are sustaining our revenue growth and revenue structure?”
Getting more information pre- and mid-trip has become more significant, as customers seek to have more confidence in the experience overall which in turn has meant upgrading the human experience parallel to the digital experience, Ourmières-Widener said. The airline has focused on their call centers as a result.
“We’ve seen a huge increase in calls even with the upgrades of our online experience. And I must say that TAP has been surprised by the pressure on the call center.”
The rebound for TAP Air Portugal points in particular to the demand from Brazil, but also to the VFR and business traveler demand from Lusophone Africa, even amid the pandemic.
“It was a very good surprise because it’s something you cannot maybe predict before the crisis, but yes, all our markets in Africa have been really resilient, most resilient market during the crisis,” said Ourmières-Widener. “And we kept our network. It’s very also key for us because we are connecting communities with a very strong link to Portugal and that’s something that we kept during the crisis.”
Ourmières-Widener characterized the split in the Lusophone market as being 60/40 VFR and business travelers, given the oil and mining industries in that part of Africa, agreeing that when commodity prices are high, business traffic from Lusophone Africa is also high.
But will TAP Air Portugal expand beyond its historical stronghold in the Portuguese-speaking Africa into other parts of the continent?
“I think for 2022, we need to be still very cautious — why, because first as you mentioned, we are in restructuring we are under state aid. It would be for us difficult to move out of these countries without taking a significant risk in investing in new destinations.”
TAP Air Portugal’s strategy is to reinforce its network and positioning in Lusophone Africa, because 2019 levels haven’t yet been reached.
“So we’ll first reinforce making sure our positions are even stronger in 2022 and then we’ll see in 2023. But our industry is still in full recovery mode,” said Ourmières-Widener said.
“But 2023 will be, I’m sure, hopefully, another story — but 2022 will be about rebuilding.”
That will include the government making a long-awaited decision on a new airport for Lisbon, on which Ourmières-Widener said the government is now willing to make a decision.
“As a main national carrier that will give us a capacity then to build a plan and to build the growth I think beyond 2023, 2024.”
TAP Air Portugal’s CEO confirmed the airline’s sustainability commitment under global airline group IATA’s 2050 net zero goals, as part of the restructuring, and that it is currently working with energy providers in Portugal for sustainable fuel for next year. “It’s an expectation from our customers, but also it’s an expectation from our employees and from our shareholders too,” said Ourmières-Widener.
With all the changes ahead post-pandemic in the airline industry, the one constant has been the lack of diversity at the leadership level. As one of the few women at the helm of a major airline, Ourmières-Widener told Unnikrishnan that she remembers being the only woman in the hangar when she started out, after studying engineering.
“We need to prepare the new generation and identify new talents and make sure they’re ready for the next steps,” Ourmières-Widener said, adding that it’s the responsibility of leaders to make sure it’s happening.
Her message to young women: “It’s possible. If they have the ambition and if they have no problem in working 24 hours a day and 365 days a year, because that’s what airline is requesting of anybody, men or women. And I think the industry is willing to see that more and more, so that’s very positive.”
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Photo credit: TAP Air Portugal