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Chapter II

REVIEW OF RELATED LITERATURES AND STUDIES

This chapter reviews various literary works and studies that have direct

references to the study. It also discusses the coping mechanism and recovery

plan of different personnel working in aviation industry.

Related Literature

A. Local

According to the article written by J. Ferreras, entitled “What Local Airlines

Want You to Know Amid Pandemic” states that not even a year since the

pandemic struck the globe, we’ve seen several airlines collapse and shut down

from bankruptcy. Among the most recent ones to announce their closure include

Cathay Dragon and AirAsia Japan. In the Philippines, thankfully, none of our

airlines have reached such a point. However, the massive layoffs by both

Philippine Airlines and Cebu Pacific, affecting thousands of Filipino airline

workers, are no laughing matter. One airline worker shared that seeing how the

country has been faring amid the pandemic, it could take the industry at least five

more years to fully recover.

According to the article written by A. Paloyo, [Link], 2020 entitled,

“Philippine Social Protection and Recovery Plan”, states that the world is facing

its biggest public health crisis in a century. Managing this crisis via a lockdown
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requires an intentional contraction of the economy of unprecedented proportions.

This deliberate and unavoidable drawdown in market activity will put businesses

at risk of destruction, with hundreds of thousands of Filipinos likely to lose their

sources of livelihood. Many households will be plunged into poverty. Without

assistance, those who are already poor will find themselves at the literal

threshold of life and death as they battle both the virus that is ravaging their

health and well-being, and the economic hardship that will almost certainly exact

a social — if not physical — death. Even those who are currently economically

stable risk joining the ranks of the vulnerable.

In an article written by LK. Esmael in The Manila Times entitled, “PAL

prepares recovery plan, seeks protection” states that the Philippine Airlines (PAL)

announced on Wednesday that it was working on a plan to restructure its debt

and rebound from the coronavirus disease 2019 (Covid-19) pandemic, which

continues to expand the air carrier’s losses and to batter the industry worldwide.

In a statement, the Lucio Tan-led flag carrier said its “management and

stakeholders continue to work on a comprehensive recovery and restructuring

plan that will enable PAL to emerge financially stronger from the current global

crisis.

In the Philippines, there is a memorandum from the Office of the Director

of Bureau of Quarantine with the subject of Monitoring of Aircraft Compliance to

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Aircraft Disinfection as part of the coping mechanism of Aviation Industry amid

Pandemic. It includes the following: (1) Performance of disinfection either pre-

spray, blocks-away or top of descent and the use of one shot aerosol for cargo

hold, airline crew must reflect that disinfection method administered together with

the serial number of aerosol cans used in the health part of the aircraft general

declaration. (2) Performance of residual spraying with addition of d-phenothrin

(2%) spot spraying to surfaces that are frequently cleaned, airline crew must

reflect that disinfection method administered together with the date of residual

certificate

and serial number of aerosol cans used for spot spraying in the health part of the

aircraft general declaration.

Based on the published report by M. Camus in Philippine Daily Inquirer

last 2021, Lufthansa Technik Philippines (LTP), maintenance provider to the

world’s airlines, is cutting 300 jobs in April after the COVID19 pandemic crippled

the air travel sector and forced some of its airline clients into bankruptcy. In his

letter, Lutter also outlined the steps LTP took to keep workers employed and to

shield them from the impact of the health crisis. This included flexible work

arrangements, additional and advanced leaves, face masks and vitamins.

Ultimately, Lutter said the move would “secure the fiscal health of the company to

tide it through this critical period and is considered temporary until our industry

fully recovers. Even after separation, he said qualified employees may enroll in
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its “Salute Program,” which will keep skills and authorizations current for future

rehiring. The program also includes assistance in skills training and consultation

for those who wish to pursue new passions in the interim or for good.

B. Foreign

According to the article written by K. Kaushik entitled “How to Ensure

Aviation Business Continuity During COVID-19” states that Aviation Business

Continuity has been greatly impacted since the onset of 2020, due to the

Pandemic. Many industries like Automobile, Oil & Gas, Tourism, Entertainment,

including Aviation have faced heavy financial loss. The Aviation Industry has

been heavily affected with the number of passengers reduced to half, as well as

the revenue as of October 2020 when compared to October 2019 based on the

OAG data. Things get more complex when the industry in question is aviation, as

only 8% of companies in the aviation community are reporting any innovation-

driven transformation and even those initiatives will take more than 3 years to be

realized. The aviation industry is still in its infancy and using the legacy

infrastructure to tackle modern problems. This is when a Business Continuity

Plan comes into the picture. A proper BCP can help airline services to resume

their function in the event of a pandemic like COVID-19 or a natural disaster. A

proper Business Continuity Plan will help you understand what type of IT

infrastructure, processes, and talents are required to sustain and flourish

business in the face of an unexpected event. Companies in the aviation industry

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need to have a better process, people, and products to achieve success during

dire times. It is wrong to assume that if you do not have a proper Business

Continuity Plan then you will have time to recover later rather you could go out of

the business. Business continuity in the Aviation sector could be challenging but

most of the hurdles can be eliminated by proper planning and using the right

technological solutions. Whether it is adhering to compliance, or using an entirely

new application amid the chaos, the right tool can enable, and ensure Business

Continuity irrespective of the situation.

Based on the article written by J. Bouwer [Link]., last 2020 entitled “Will

airline hubs recover from COVID-19?” states that the airline industry is among

the most affected by the COVID-19 crisis, and global air-passenger volume in

August 2020 was still down around 64 percent compared with the same period in

2019. Yet the impact of the crisis has differed by type of travel. Domestic travel,

for example, was down 51 percent year over year in August, while international

travel was down 81 percent. The volume of connecting passengers (which has

fallen 81 percent year over year) has also been more affected than nonstop

traffic (which has fallen 61 percent). The larger impact on connecting travel has

been due to falls in both demand and supply. On the demand side, part of the

explanation is the decrease in long-haul, intercontinental itineraries, where

connecting is more common. Passengers are also exhibiting a stronger

preference for nonstop travel, both to avoid the perceived double risk of
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contracting the coronavirus and because the increased complexity of travel

restrictions and quarantine rules can be confusing to even the hardiest traveler.

On the supply side, the limited flight schedules currently in place have broken the

connecting banks of many airlines. In August 2019, for example, a passenger on

an incoming flight to Frankfurt could connect to around 35 flights within a

connecting window of one to four hours; the possible connections fell to just 11

by August 2020. In a hub model, airlines use banks of incoming and outgoing

flights to offer passengers a large number of possible itineraries. This model has

been a cornerstone of full-service carrier networks across the globe for several

decades. The demand for connecting flights on key intercontinental routes has

been stable or rising in recent years because of both the many logistical and

financial advantages for airlines and passengers and recent improvements in

passenger experience. Even before the crisis, however, the future of the hub

model was the subject of a long-running debate. Some experts have argued that

changing aircraft technology favors point-to-point (P2P) flights, that

environmental concerns threaten circuitous connecting itineraries, and that hub

congestion and the stress of tight connections might limit the further growth of

hub carriers.

Another article written by J. Bouwer [Link]., last 2021 entitled “Back to the

future? Airline sector poised for change post-COVID-19” states that it’s difficult to

overstate just how much the COVID-19 pandemic has devastated airlines. In
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2020, industry revenues totaled $328 billion, around 40 percent of the previous

years. In nominal terms, that’s the same as in 2000. The sector is expected to be

smaller for years to come; we project traffic won’t return to 2019 levels before

2024. Financial woes aside, the pandemic’s longer-term effects on aviation are

emerging. Some of these are obvious: hygiene and safety standards will be more

stringent, and digitalization will continue to transform the travel experience.

Mobile apps will be used to store travelers’ vaccine certificates and COVID-19

test results. Other effects, though, are more profound. Unlike the 2008 global

financial crisis, which was purely economic and weakened spending power,

COVID-19 has changed consumer behavior—and the airline sector—irrevocably.

Business travel will take longer to recover, and even then, we estimate it will only

likely recover to around 80 percent of pre-pandemic levels by 2024. Remote work

and other flexible working arrangements are likely to remain in some form post-

pandemic and people will take fewer corporate trips. Staggering debt levels will

lead to ticket price increases and a larger role for government in the sector. Many

airlines have had to borrow huge sums of money to stay afloat and cope with

high daily cash burn rates. Tapping into state-provided aid, credit lines, and bond

issuances, the industry collectively amassed more than $180 billion worth of debt

in 2020,1 a figure equivalent to more than half of total annual revenues that year.

And debt levels are still rising (Exhibit 2). Repaying these loans is made even

harder by worsening credit ratings and higher financing costs. Some airlines

have responded to the pandemic by restructuring for greater efficiency; others

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are merely muddling through. Occasionally, this is linked to state-aid programs,

which may reduce the incentive for much-needed measures such as cost,

organizational, and operational restructuring. Airlines that are not proactively

transforming risk failing to set the business up for longer-term structural value

creation. Aircraft markets may be oversupplied for some time to come. In the

years before COVID-19, aircraft OEMs ramped up production in the anticipation

of continued growth. This has led to a glut in aircraft availability. Furthermore,

some carriers have returned relatively new aircraft to lessors, such as Norwegian

Air Shuttle when it exited the long-haul market. Prices for used-aircraft leases

have plummeted and are likely to remain lower. For instance, the monthly lease

rate of a 2016 vintage Boeing 777-300ER aircraft was around $1.2 million in

2019. In 2020, the rate fell to less than $800,000. New aircraft are rumored to be

available at even deeper discounts.

Based on the published article by A. Bachan [Link]., last 2020 entitled

“Aviation Maintenance and COVID-19” states that there were several coping

strategies e.g., (1) Guarantee of personal safety is first. Everyone has to feel one

hundred per cent certain that they will not contract the virus from traveling and

that their family will be safe. Each touch point and interface must be safe. (2)

Generating liquidity and conserving cash is high on everyone’s agenda. This

means that investments previously planned are no longer a priority and any

expense is scrutinized with the utmost diligence. We also see that facilities have
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to be right sized along with materials and resources: buildings, spaces and

material assets. For example, there is a lot of capital tied up in spare parts. With

less aircraft flying, that value can be leveraged to carry the business forward

through this trough. (3) Staff productivity is a key issue. We’ve seen many

working from home during the pandemic, but how do you maximize staff

productivity in such a situation? There are two schools of thought. People tend to

spend more time working when at home especially if the work involves desk-

based activities; but then there’s also speculation that if people aren’t out there

mingling, if they’re not in a physical as opposed to a virtual community setting,

productivity suffers. Sometimes just sharing ideas, communicating with each

other can optimize productivity: so, finding ways to maximize staff productivity as

we emerge from Covid-19 is key for organizations and how they are adapting or

needing to change. (4) Revenue is being generated from alternate sources: we

have seen passenger aircraft being flown with seats in and with seats out for

cargo operations, especially PPE equipment.

Based on the published article by the US Government Accountability

Office last 2021 entitled, “COVID-19 Pandemic: Observations on the Ongoing

Recovery of the Aviation Industry” states that In response to the pandemic's

effects, aviation stakeholders reported that they acted quickly to mitigate financial

losses and position themselves to maintain business viability until demand

increased. Stakeholders' actions included: (1) Managing costs, such as

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implementing early retirement programs. (2) Raising funds in the private market

to increase liquidity and (3) Taking steps to mitigate COVID-19’s spread among

employees and customers. The Federal Aviation Administration (FAA) reported

taking quick action to help the aviation industry adjust operations in response to

the pandemic. These actions included providing temporary relief from some

regulatory requirements—such as airline crewmember medical certifications—

and issuing guidance to airlines and airports on mitigating COVID-19 risks. FAA

has phased out many of these relief measures.

Related Studies

A. Local

A local study conducted by A. Gonzales last 2021 entitled “Impact of the

COVID-19 Pandemic on the Philippine Metal Working Industry: A

Phenomenological Approach” revealed that the experiences of the Philippine

metalworking industries during the imposition of the government’s directives to

slow down the spread of the Covid-19 virus in the country need to be given due

consideration to determine the necessary actions to be taken in reviving the

Philippine economy. A qualitative phenomenological approach is necessary to

extract the lived experiences of the different metalworking industry players and

identify the essential themes that define their ‘lifeworld’ concept. The study

focuses on the extent of changes experienced by the metalworking industries

due to the Covid-19 pandemic, their coping strategies with the new normal, and
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the assistance needed from concerned agencies and stakeholders. The essential

themes that emerged in the extent of changes experienced were abrupt changes

in the market condition, severe disruption in operations and mobility, and

restricted cash flow while shouldering the cost of health security protocols. The

essential themes for coping strategies with the new normal were adjusting to the

new health security protocols, creating opportunities in a crisis, pursuing survival

measures, and contemplating flight reactions. The essential theme for the

assistance needed from concerned agencies and stakeholders was needing

sound economic policies. The Philippine metalworking industries are one of the

drivers of the industrialization and automation of the country. If the government

wants to establish a stronger and more resilient Philippine economy, local

industries such as the metalworking industries must be revitalized.

Based on the local study conducted by M. Seriño [Link]., last April 2021

entitled “Local Response and Coping Mechanisms Adopted to Disruptions

Associated with the COVID-19 Pandemic at a Filipino State University” states

that The various social and mobility restrictions imposed during the COVID-19

pandemic brought unprecedented disruptions in working adults' day-to-day lives

at Visayas State University in Leyte Island, Philippines. Everyone had to adjust

abruptly to help contain the spread of the virus. In this paper, one of the local

responses through an agricultural production program at the University is

highlighted, and reflections on its employees’ coping mechanisms are recorded

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in response to the pandemic. The initiative taken was to intensify vegetable

production for local consumption to mitigate the looming disruption in the supply

of vegetables to neighboring towns. To date, at least seven tons of assorted

vegetables have been distributed to around 5,000 beneficiaries in the province.

The results of the cross-sectional survey show that the topmost-ranked coping

mechanism for both men and women during the lockdown was engaging in

household chores. Beyond that, men were more inclined to surf the Internet,

while women focused more on gardening. Policymakers and administrators can

use these results as a benchmark to develop programs and approaches that may

contribute to working adults' well-being during this pandemic.

B. Foreign

Based on the study conducted by MA. Berawi [Link]., last December 2020

entitled “Post-COVID-19 Recovery Models and Strategies for Aviation in

Indonesia” states that the global aviation has experienced many crises in the

past, each of which has had a significant impact on air traffic. After each fall, the

industry recovers and returns stronger, exceeding the previous volume of traffic;

however, the COVID-19 pandemic presents a new level of concern, with

unknown detrimental effects. The airlines, airports and all other partners involved

have greatly suffered. The airport system has been hit by flight closures in many

markets, including Indonesia. Airport management and operating companies,

concessionaires, terminal tenants, ground handling and catering companies, and

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the various partners involved are under stress and financial constraints due to

the pandemic. In response to this, the flight plan for the “new normal” takes into

account the new flight demand and airline market structure scenarios. By using

the qualitative approach, this research tries to construct recovery models and

strategies for the Indonesian aviation industry post-pandemic. Results show

several scenarios, classified as optimistic, moderate, and conservative for the

recovery of the industry. This requires the construction of a business model

through the V-shape, U-shape, Prolonged U-shape, L-shape and W-shape. In

striving for the recovery of the aviation industry, three strategies are needed:

survival, growth, and sustainability.

Based on the result of study conducted by L. Budd [Link]., entitled

“European Airline response to the COVID-19 Pandemic – Contraction,

Consolidation and Future considerations for Airline Business and Management”,

COVID-19 pandemic and the resulting travel restrictions and fall in consumer

demand led to a dramatic and unprecedented reduction in passenger flights

across Europe. As borders closed, national Governments advised against all, but

essential travel and passenger demand disappeared, European airlines were

forced to quickly respond to the downturn and impose unprecedented cost saving

measures to protect their business. The aim of this paper is to examine the ways

in which major European passenger airlines responded to the height of the

COVID-19 crisis in the period March – May 2020. Using data from Eurocontrol,
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the European network manager, the paper identifies the responses individual

airline operators and parent companies took to contract and consolidate their

operations. The findings show that changes to flight operations, rationalizing the

fleet, reducing staff numbers, and reconfiguring their networks and capacity were

the most common responses. The paper concludes by discussing future

considerations for airline business and management as European carriers seek

to restructure their operations and adapt to a new post-COVID reality.

It also revealed on the study conducted by A. Belhadi [Link]., last 2021

entitled “Manufacturing and service supply chain resilience to the COVID-19

outbreak: Lessons learned from the Automobile and Airline Industries” that the

automobile industry perceived that the best strategies to mitigate risks related to

COVID-19, were to develop localized supply sources and use advanced industry

4.0 (I4.0) technologies. (ii) The airline industry on the other hand, perceived that

the immediate need was to get ready for business continuity challenges posed by

COVID-19, by defining their operations both at the airports and within the flights.

(iii) Importantly, both the sectors perceived Big Data Analytics (BDA) to play a

significant role by providing real-time information on various supply chain

activities to overcome the challenges posed by COVID-19. (iv) Cooperation

among supply chain stakeholders is perceived, as needed to overcome the

challenges of the pandemic, and to accelerate the use of digital technologies.

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According to the study conducted by A. Czerny [Link]., last 2021 entitled

“Post Pandemic Aviation Market Recovery: Experience and Lessons from China”

revealed that the recovery of international services has been much slower, due to

the bilateral route and flight frequency/capacity control and strict requirements for

health check and quarantine. China's domestic aviation market was recovered by

about 80% in two months after the pandemic became under good control. Most

other countries with a “curve flattening” strategy, instead of full pandemic control,

may not expect the fast recovery path China has achieved. A British “travel

corridor” approach may be more practical for Western countries to follow, albeit

more likely to be subject to serious setbacks and disruptions. The aviation fee

reductions and cost support China and many other countries have been using

are helpful by reducing airlines' marginal costs, but not sufficient for carriers to

return to profitability or sustainable operations. Capital injection and/or credit

guarantee may be needed for many airlines to survive. With various, often

uncoordinated, regulations imposed in international markets, airlines based in

open economies that have small domestic markets will face particularly serious

challenges during the recovery process.

A study conducted by C. Zhu last 2021 entitled,” Recovery Preparedness

of Global Air Transport influenced by COVID-19 Pandemic: Policy Intervention

Analysis” showed that the outbreak of COVID-19 constitutes an unprecedented

disruption globally, in which risk management framework is on top priority in

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many countries. Travel restriction and home/office quarantine are some

frequently utilized non-pharmaceutical interventions, which bring the worst crisis

of airline industry compared with other transport modes. Therefore, the post-

recovery of global air transport is extremely important, which is full of uncertainty

but rare to be studied. The explicit/implicit interacted factors generate difficulties

in drawing insights into the complicated relationship and policy intervention

assessment. In this paper, a Causal Bayesian Network (CBN) is utilized for the

modelling of the post-recovery behavior, in which parameters are synthesized

from expert knowledge, open-source information and interviews from travelers.

The tendency of public policy in reaction to COVID-19 is analyzed, whilst

sensitivity analysis and forward/backward belief propagation analysis are

conducted. Results show the feasibility and scalability of this model. On condition

that no effective health intervention method (vaccine, medicine) will be available

soon, it is predicted that nearly 120 days from May 22, 2020, would be spent for

the number of commercial flights to recover back to 58.52%–60.39% on different

interventions. This intervention analysis framework is of high potential in the

decision making of recovery preparedness and risk management for building the

new normal of global air transport.