Post COVID world

DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - April 29, 2020 - 12:00am

We can’t be sure when we will get there. It could take a few weeks, a few months, a couple of years. One thing is sure… the post coronavirus disease 2019 or COVID-19 world is going to be very different from what it was before we hunkered down.

There are many lessons we have learned as a country and as individuals. For one, we should have been like Taiwan, which learned from the SARS epidemic the need to always be prepared for the next one.

As individuals, we have to get used to wearing masks and practicing social distancing. We will no longer shake hands but wave or bow instead as a sign of friendship.

During the first few months, we would still be prohibited from attending church services, concerts, sports and other events with crowds of people in attendance. There will be longer waits for public transport as social distancing requires buses and jeepneys to take only half of usual number of passengers.

Restaurants must reinvent their business because they will be required to observe social distancing. Mostly, table for one. Restaurants offering buffets will have to close down. Many restaurants will choose to just do take-outs. Faster turnover of customers and less chance of violating social distancing rules.

During the lockdown, working from home proved more difficult for those with young families and cramped living quarters. But there were those who proved they can be as, if not more, productive working from home.

Companies could continue to be more flexible on where employees work from. WFH means less office space to rent. But WFH may also require companies to subsidize better internet plans with faster speeds than most homes have.

With the lockdown experience, companies will be encouraged to set up work stations in locations where significant clusters of their employees live. Shaving off travel time from long commutes may have improved productivity.

Colliers, a property consultant, reported that one of its client companies in Makati “expressed their interest in diversifying their location base and is now considering places like Quezon City for business continuity preparedness.”

With a lot of people getting used to digital services like Zoom, there is less reason to go to a head office for a meeting. And for those with employees working in other cities, less travel expenses too. But the telcos must drastically upgrade their ability to cope with demand for more reliable bandwidth services.

And speaking of travel, this industry will practically not exist in the next year or so. There will be little or no overseas leisure travel and limited business travel. No large conferences in the foreseeable future.

The airline industry will face a drastic restructuring worldwide. Many airlines will simply die. Those who survive must raise fares significantly as social distancing will mean keeping seats vacant in between passengers.

The International Air Transport Association estimates that the global industry will lose $252 billion in 2020.

“Many airlines are cutting up to 90 percent of their flight capacity. On March 1, more than two million people in the United States were flying per day. A month on, fewer than 100,000 people are going through airport security daily.”

The world will find out that airports have been built too big for the new normal demand. Many terminals will remain empty and idle aircraft occupy available parking space. The Bulacan airport San Miguel wants to build, as well as the one proposed in Sangley, may lose their urgency as air travel declines significantly worldwide.

Which airlines survive will largely depend on how well they convince their governments to provide them bailout packages. With national pride attached to flag carriers, many such airlines will present themselves as too big to fail and as such, demand governments to support them.

The problem, however, is that most governments have exhausted their financial resources dealing with the COVID pandemic. For instance, it is doubtful our airlines can get any significant support from our government.

Philippine Airlines was already in a financially perilous situation even before COVID. The pandemic must have sealed its fate somehow, but no one wants to acknowledge the inevitable just yet.

Indeed, to the airline’s credit, it did its best to show that having a national airline is useful in times of emergency. It made a number of flights to many parts of the world to fetch stranded Filipinos, specially OFWs. It made cargo flights to China to pick up PPEs and test kits urgently needed in the COVID fight.

Even as PAL may have proved its usefulness, it is still a question of whether our government can afford to bail it out. PAL’s large creditors will have to take one on the chin.

Simply, our government is in no position to bailout any entity. Tax collections are going down as the economy tanks.

What goes in favor of PAL is the deep pockets of its principal owner. Lucio Tan still has substantial property and other assets abroad, notably in China and Hong Kong. He can decide to bet all his assets on the airline which has a special place in his heart.

New aviation market conditions also make a bailout iffy. The market has significantly shrunk. With increased fares due to social distancing, less people can afford to fly.

The tough question is: Do we need all those planes of over a hundred for PAL, Cebu Pacific’s 70 plus and the dozen or so of Air Asia Philippines?

The most basic question for all industries is: Are we really now on a post COVID situation or just a recess from a virus we are still trying to figure out?

MonJ

So sad to hear former tourism secretary Ramon Jimenez has died. A creative genius, MonJ was the kind of tourism secretary we need. I didn’t even know he was sick. He was just 64.

My condolences to MonJ’s family. I share their deep personal loss. He is now happily together with his late wife Abby, whose death some years ago he deeply felt.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

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