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Hi there,
The novel coronavirus has the airline and travel industry plummeting to the worst downturn since 9/11 – if not worse. We want to look at the dramatic consequences (and opportunities), but before, I want to share an observation with you that I feel like most of us make these days:
No one knows how to casually say hello anymore!
The spread of coronavirus tends to have a lasting impact on office etiquette – at least for those who are not in home office yet. "No more handshakes" is the rule we hear everyone say.
But what to do instead?
My colleague Ly, who is creating this newsletter with me, has been mocking me for switching to a (Japanese) bow recently. I have to admit, there is an awkward-factor to it.
Ly prefers the “waving hand” movement – which to me feels strangely limp and can easily drift towards being cringe-worthy as well – see the Merkel-Seehofer incident.
For some reason, it feels important to offer some sort of physical gesture that none of the above two options provide.
So should we all switch to fist bumps then? Or is that too much physical contact already for germs to spread from one person to the next?
In our role to provide you with unconventional intelligence for smarter decision-making, we found the necessary data. The Economist compared different forms of handshakes and their respective transfer of bacteria.
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The takeaway: fist bumps score a lot better than regular (moderate) handshakes. But they still transfer up to ~20% of germs. So no fist-bumping for us.
We will update you on whether the bow or hand wave becomes our new greeting style. Until then, be well and stay safe (and at home, if possible).
Newsletter specs for today: 4:30 minutes of reading time.
Lennart Dobravsky
Director Research & Intelligence, Lufthansa Innovation Hub
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More Travel and Mobility Tech startup maps
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The corona crisis is currently testing the spirits of all of us, but we want to continue foster and promote the opportunities waiting ahead of us.
Nothing boosts our optimism more than looking at the tech startup world and those exceptional founders who spotted opportunities, built businesses, and scaled them to billion-dollar valuations.
In our newsletter edition two weeks ago, we shared a map of the 20 most-funded Travel and Mobility Tech startups in Germany. Today, we have two brand new startup mappings for you.
We listed the 20 most-funded Travel and Mobility Tech players in Europe and the U.S. in two new infographics. The mappings also include detailed company information. Check them out.
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The airline industry is taking blow after blow from the novel coronavirus. Chinese airline passenger numbers slumped by 84.5% last month, highlighting the huge economic impact of the outbreak. Yesterday’s news about the Trump Administration banning travel from Europe to the U.S. added another level of dramatic disruption.
The pain is certainly as acute as imaginable for airlines at the moment. The IATA estimated the COVID impact to at least $63 – $113 billion this year – and this was before they knew about the European travel ban.
The collapse in travel bookings not only affects airlines but the entire Travel and Mobility Tech ecosystem. Airport retail sales plummeted by as much as 70% in major hubs. Tours & Activities startup giant GetYourGuide reported a 50% drop in bookings and a global cancelation rate of >20% compared to normal levels as Phocuswire reported.
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Pessimism never won any battle
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Despite all these devastating news for the travel sector, deep down, we shall all remain optimistic. We shouldn't forget that the industry has always bounced back vigorously – after 9/11, the 2003 SARS epidemic, the 2008 financial crisis as well as the swine flu in 2009.
Furthermore, in a matter of weeks, entirely new behaviors will create entirely new opportunities. Many bright minds will find their next ideas and businesses thanks to the aftermath of the coronavirus in spaces such as:
And there are a lot more second- and third-order effects that we can confidently foresee, even though it’s unclear what they mean from a business perspective yet, for example:
- A lot of December babies
- New hygiene practices to become the norm
- More homeschooling, online education, and remote work software
With all this in mind, it's important to raise our spirits again!
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Even more important: flatten the curve
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Summarizing what all well-researched COVID analyses come down to these days: extreme social distancing is of paramount importance to slow down the spread of the virus, as perfectly explained in this must-read post: Why You Must Act Now.
We all need to contribute and help flatten the curve of infected people. Otherwise, the consequences of the virus will be extremely challenging for our healthcare systems and, consequently, our society as a whole – see here for another crisp explanation, if you're still skeptical.
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By the way: if you're a business leader or startup founder, check out this "living Google docs" from the Association of German Startups, collecting all kinds of best practices by companies in times of COVID – see here.
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Lower prices = more bookings?
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Another interesting discussion in our office broke out this week when we debated how airlines (including our parent company) should react to the dramatic drop in flight bookings.
Plummeting demand is already causing serious cash-flow problems for most airlines and travel providers across the globe. Most carriers reacted by introducing aggressive discounts. US airfare dropped upwards 30% on major routes. AirAsia made headlines by introducing an annual unlimited flights-pass for certain regions for as little as $118.
The rationale: the lower the price, the more people will book flights again. At least, that's what the law of supply and demand suggests.
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But does this basic economic theory hold true?
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The interesting question is whether cheaper flight prices help out in times of corona fear.
Think about it. Many people probably wouldn’t fly for any price these days. And those who are still willing or obliged to fly (e.g. business consultants) might have a much higher willingness to pay.
Maybe airlines should increase prices to maximize profits in times like these?
What do you think? Let us know via email.
We will post the most thought-provoking answers in our next newsletter.
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Some self marketing at this point
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Whether raising or lowering ticket prices is the better tactic, offering more flexible terms to passengers is a plausible strategy for airlines. And we – the Lufthansa Innovation Hub – have been working on this topic for quite some time.
In fact, we recently launched our latest venture called Reveneo – a new generation of ticket-pricing software that provides airlines with more flexibility and freedom to offer new ticket options to customers.
Learn more right here if you have a minute:
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Our recommended must reads
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REDESIGNING TRAVEL – We’re designing travel wrong for pandemics, as the new coronavirus has made abundantly clear. The good news: It can be fixed.
 Read more in FastCompany
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PAYING YOUR COMPETITOR'S MARKETING – Expedia and Bookings Holdings spent 11 billion on marketing in 2019. Ironically, most went to Google to fight Google’s own travel listings that score above Expedia’s and Booking’s offers.
Read more on Phocuswire
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AIRPORT INNOVATION BOOST – Changi and Accenture have signed a partnership agreement to build a digital factory inside the Changi airport to continuingly innovate airport experience and operations.
Read more on Phocuswire
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MOST INNOVATIVE TRAVEL COMPANIES – Fast company released a list of the most innovative companies and included a travel category. Hopper claimed the spot no.1 for ‘taking the decision fatigue out of travel’.
Read more on Fast Company
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ALARMING SIGNS FROM ONE OF THE GREATS – Oyo, the SoftBank-backed budget hotel chain and one of the 45 unicorns in Travel and Mobility Tech, is in a world of pain. Oyo seems to be on the brink of collapse, at least in China.
Read more on technode
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Most recent Venture Capital deals
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 = Exit Alert (startup listed at the stock exchange or got acquired)
 = Unicorn Alert (post-deal company valuation at >$1B)
Waymo – the US-based autonomous driving startup owned by Alphabet raised $2.25B from Silver Lake, Canada Pension Plan Investment Board, and Mubadala Investment Company.
Cityscoot – the French electric moped startup raised $25.6M from Allianz France and Demeter.
Checkfront – the Canada-based tour and activity platform raised $10M from Framework Venture Partners, PenderFund Capital Management, and further investors.
Lanes & Planes – the Germany-based corporate travel startup raised $10M from Battery Ventures, DN Capital, and further investors.
Oaky – the Amsterdam-based hotel upsell platform raised $9.5M from PeakSpan Capital.
Sensible 4 – the Finnish autonomous driving startup raised $7M from NordicNinjia VC and Itochu.
Yonder – the US-based booking startup for nature travels raised $4M from unnamed investors.
Viselio – the Swiss automated visa service provider raised $3.21M from Howzat Partners, Innuvik Ventures, and further investors.
TPConnects – the Dubai-based SaaS travel technology provider raised an undisclosed amount from Flight Center Travel Group.
Airside – the US-based mobile identity solution provider raised an undisclosed amount from Amadeus Ventures.
Gogobus – the Indian inter-city bus operator raised an undisclosed amount from Ixigo.
Suitepad – the Berlin-based in-room tablets startup for hotels raised a seven-digit round of funding from Riverside Acceleration Capital, Target Partners, and further investors.
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