Oman Air, the national flag bearer of the Sultanate of Oman, was founded in 1993, operating 49 carriers of different categories and ranked 4th in the 2020 APEX Regional Passenger Choice Awards (PCAs). Oman Air has a workforce of 5000 employees and provides services in the Middle East, Indian subcontinent, Asia and Europe. Oman Air had revenue of OMR 523 MM (US$ 1.36 Billion). in 2017, which was a 16.37% increase from OMR 499 MM (US$ 1.29 Billion). Oman Air has achieved multiple recognition awards for its best performance and services offered to its customers (Grover, 2020a).

Under the prevailing COVID-19 situation, Oman Air focuses on its internal and subcontinent routes due to the passenger traffic flow for these areas. In 2020 alone, approximately 263,000 expats lost their jobs and left for their native countries. This number is nearly 15% of Oman’s expat workforce. The left workforce represents the shift in demand in the local Oman market. To maintain the business, Oman Air collaborates with other Oman airlines to jointly operate its routes for cost savings and operational optimizations (MuscatDaily, 2020).

To attract more customers and add to their value, effective October 2020, Oman Air is offering complimentary COVID-19 medical insurance coverage during its stay in Oman. In addition, the Oman Government, in general, and Oman Air, in particular, have adopted measures for test screenings, medical supplies for cabin crews, provision of sanitizers, and maintaining social distancing requirements to adhere to the local regulations (OmanAir, 2020).

Supply Chain Management converts raw materials into finished products and manages the distribution process until the product or service is delivered to the end customer at an acceptable and sustainable price. It includes a procurement process that deals with material inputs for any operational value-addition, managing inventories with techniques to optimize the inventory level and working capital employed, and managing the distribution function by selecting the most competitive and time-efficient modes of transportation (Lopez, 2017). One crucial aspect of supply chain management is the information gathering at each stage of procurement, production, distribution, and sales network and then strategically utilizing this information to optimize the functions at each location, thus reducing the overall cost, bringing operational efficiency, and contributing in overall organizational success. Without effective supply chain management, there is no possibility of organizational success at corporate, regional, or international levels, and the company faces multiple challenges in economic, political, cultural, and industrial regulations.

The supply chain is visible in the broad day life of an ordinary person, from going to the market to buying groceries to visiting a hospital for medical treatment and traveling on a road or a plane; everywhere, the supply chain is functioning in various forms. As a format, the supply chain remains the same, converting raw materials into finished products and delivering them to the end customer to earn money. In a service industry like aviation, supply chain requirements differ in vocabulary, but they remain the same as a concept.

Now, each Supply Chain organization specializes in its operations and collaborates cross-industry to take advantage of specialized services provided by each industry. For example, the transportation industry feeds multiple sectors in a unique way that fits the specific requirements of each sector. The need for an airport shuttle for an airline business differs from providing a local transportation service within a dense city or providing material transportation between the USA and Canada on long-haul routes. The choice of transportation mode is different for different sectors, depending on weight, volume, worth of cargo, and the delicacies required to handle the materials with related implications of cost and lead time.

Covid-19 impact on logistics management is paramount. Increased border control and lead time disturbances are impacting the operating plans. To cope with the ongoing challenge, there is a need to improve visibility across the supply chain functions within the same organization and cross-industry collaboration and cooperation that enables overall business sustainability goals. Many organizations only focus on internal improvements, but the challenge of coping with COVID-19 cannot be fulfilled without a broader vision.

In a Supply Chain environment, real-time logistics visibility can help reduce the number of trips back and forth daily. Transport order transmission can take place in real time, with end-to-end demand-supply visibility, positively impacting savings costs. In COVID-19, there is much more need for Supply Chain innovation while remaining sensitive to spending additional dollars without proper commercially feasible cases. This approach can help organizations stay lean while agile enough to respond to customer requirements and maintain profitability for a long-term business sustainability perspective.

Supply Chain visibility plays a vital role in timely reverting the broken supply functions and acting quickly without compromising cost and expected efficiency requirements, maximizing the added value and achieving higher customer satisfaction levels. Supply Chain visibility plays a vital role in proactively countering any disruptions to supply functions. It is possible only when a timely flow of information at the proper channels is made available with the use of modern technology tools; the Internet of Things (“IOT”)., Big Data Analytics (“BDA ”). and the use of Omnichannel for faster & effective communications and data capture.

Modern technologies and sophisticated software are not new to the aviation industry. The nature of this industry’s business is based on customer interactions; the easier it is for the customer to interact with the company, the better for the business. The concept of ticket booking from anywhere in the world requires global set-up software that enables users to make bookings 24/7.

The impact of COVID-19 is global, and the aviation industry, one of the most synchronized operations, has taken an adverse hit. During Q1-2020, the demand for international and domestic air travel was reduced by up to 80% in some cases. Reduced demand and related revenue opportunities have negatively influenced business cash flows. The airline industry, as a whole, is facing a liquidity crunch issue. The aviation industry is bringing innovative ways to prolong the withheld cash to maintain its operations and keep the business sustainable.

Oman Air, for example, has extended the expiry dates of its valid tickets beyond one (1). year to avoid cash reimbursements to its customers to avoid the liquidity crunch.

In addition, due to the pandemic and reduced passenger travel requirements, Oman Air is especially focusing on increasing its contribution to handling 24/7 air cargo services. During 2019, Oman Air handled 112,500 tons of air cargo, increasing 16% from the preceding year. Oman Air’s cargo handling capability is 350,000 tons per year, and it can handle versatile cargo loads, including chemicals, dangerous goods, livestock and pharmaceuticals, and general equipment cargo. Based on available data, Oman Air is still required to do better to gain a broader air cargo share to achieve its capability of handling 350,000 tons of cargo in a year. In March 2020, “Oman Air Cargo, a division of the national carrier of Oman, was awarded the Fastest Growing International Cargo Airline of the Year (Highly Acclaimed). The Air Cargo India 2020 awards gala was held recently in Mumbai.” (Grover, 2020a)..

Although air cargo demand was also impacted by COVID-19, the focus remains on offering efficient and customized services tailored to individual customers to increase revenue in the air cargo alternative area. The aviation industry is yet to find pre-COVID-19 air cargo levels despite recovering in Q2-Q3, 2020 (Grover, 2020b).

World freight traffic reported by ICAO[1] A net reduction of 12.6% was noted in August 2020, recovering from the peak reduction of 27.7% in April 2020. The sustained recovery in the future is directly linked to the lifting of COVID-19 restrictions and streamlining of industrial operations (ICAO, 2020).

Figure 1 – IATA[2] World Trade Estimate (%).

1.    Recovery Through Supply Chain Resilience

The current COVID-19 wave is different from the difficulties faced by Supply Chain earlier. The recent surge has spread far more scare and fear among the masses, resulting in an immediate reduction in business volumes and putting the whole global business at a standstill.

For many small businesses, this situation is unsustainable, and many companies are closing their shops due to operating costs being unbearable under the conditions of reduced revenue. Even for the big businesses with healthy cash flows earlier, working conditions are different now with increased cost impact due to Covid-19-related regulations and requirements in terms of PCR testing[3], provision of medical supplies, adhering to governmental requirements, mobility of resources, transportation disruptions, and expensive logistics available due to low volumes.

According to a study, “94% of Fortune 1000 companies are seeing Supply Chain disruptions from COVID-19. 75% of companies harm businesses, and 55% of companies plan to downgrade their growth plans” (Accenture, 2020b).

For a resilient Supply Chain, the need is to identify the challenges under the COVID-19 scenario and find suitable remedial actions to mitigate the adverse impact. Supply Chain gap analysis, which reviews all business activities, can also be beneficial to cope with the challenge.

2.    Risks and Challenges:

1. COVID-19 has introduced a new consumer behaviour that is very cost-conscious, unwilling to spend on luxuries, and wants to save for unforeseen circumstances, resulting in a global demand shortage across all industries. Similarly, logistics restrictions have created supply shortages as well. The airline industry, in particular, has seen an 80% demand decline in the early phase of COVID-19.
2. A short-term tactical plan is required to analyze and deploy a counter plan to mitigate the risks related to COVID-19. In this regard, Big Data Analytics can play a vital role in overseeing the complexity of operations and avoiding severe cost impacts that could damage the business’s long-term growth potential.
3. Increased business costs can be balanced with lean operations across all Supply Chain functions, thus reducing process waste and business redundancies. Transport visibility is an example of how the aviation industry can benefit from lower operating costs.
4. Training and boosting workforce capability can benefit from using the same resources in multiple positions, eliminating inefficiencies and dependencies on individualized parts. Extreme circumstances require drastic measures, and employees in the aviation industry, especially the airline business, are aware of the ongoing business situation. In Oman Air, redundant vacancies are eliminated, but these changes impact expat labour primarily due to local labour regulations (Times News Service, 2020).
5. Assessing and filling up gap areas will ensure resilience and long-term sustainability. Each business activity is judged from the value impact point of view. High-value contributor activities must be appreciated and regarded.
6. New service solutions must be cost-effective and show social responsibility to enhance the company’s reputation and expand the customer base. Customized solutions should be offered after an end-to-end assessment and complete service monitoring to avoid defects in service delivery and negative customer feedback.
7. While working on a Lean Supply Chain, agility to respond to ever-changing circumstances must not be compromised. Dealing with the COVID-19 pandemic is possible only by creating long-term resilience and skill as part of the corporate strategy.
8. The airline industry must not be afraid to invest in adjusting to changing times. A timely investment now is worth paying off in the future. A delayed response to pandemic-related investment opportunities will continuously diminish the organizational capacity to cope with the harsh business environment.
9. Data visibility across Supply Chain functions and cross-industry can play a vital role. The scale of COVID-19 damage to global businesses is not for one company or business sector to tackle. The best strategy is to tackle the negative impact of slower business growth, enhanced operating costs, and slimmer margins. Companies will suffer more losses than prevailing in the current business environment with an individualized approach.

3.    Remedial Steps:

The following steps can help to increase Supply Chain resilience as provided below: –

1. Maintain the Workforce in good motivational condition. Only a motivated workforce can cope with emerging challenges.
2. Redefine capabilities. New challenges required a new vision and strategy to tackle the post-Covid-19 situation.
3. Think local—optimize the resource as much as possible and source locally to avoid long lead times, bypass travel restrictions, and avoid currency exchange risks. Developing local partnerships to ensure supply lines will benefit the business (Accenture, 2020a).
4. Strengthen the Supply Chain processes and support the procedures and workflows.
5. Use Analytics to increase operational and cost visibility and help strategize critical functions. Sharing information increases confidence among partner firms. However, each firm can decide what to share with whom and to what extent to maintain corporate integrity and competitive processes (Prater and Whitehead, 2013).
6. Maintain Flexibility—To cope with an ongoing scenario, be flexible and implement required changes and adaptability on short notice.
7. Design for Resilience—Keep investments, considering COVID-19 is ongoing. Its direct impact and after-effects will remain before businesses fully recover from the pre-COVID-19 situation and customer satisfaction is restored.
8. Risk assessments for COVID-19 must be continuously updated to reflect the current situation (Alicke and Strigel, 2020).

4.    Oman Air Remedies to Counter Covid-19 Impact:

During the post-Covid-19 scenario, Oman Air has been very proactive in customizing services to suit customer requirements.

1. Postponement of ticket encashment to boost liquidity
2. Collaboration with local and international airlines to maximize capacity utilization.
3. Agreements with international airlines, mainly from Europe, for Oman Air to carry flights on their behalf.
4. Exceeded measures for the safety of passengers, including maintaining social distancing and implementing mandatory Covid-19 tests before departures.
5. Effective October 2020, Oman Air offers its passengers complimentary COVID-19 coverage to meet Sultanate of Oman regulations (OmanAir, 2020).
6. Medical safety kits for flight attendants and frequent PCR tests to ensure staff safety and well-being.
7. Focus on air cargo when passenger travels are still restricted with necessary measures to ensure safe cargo handling.
8. Revisit the staff count and maintain the most critical staff required to suit operational requirements under COVID-19 (Al Lawati and Odeh, 2020).

5.    Road to Recovery through Information Technology

The use of Big Data Analytics (“BDA”)., Internet of Things (“IOT”)., Omnichannel, and Blockchain technology enables the organization-wide visibility of operational performance and cost allocations. With data availability, it becomes easy for the management to decide where to focus for more efficiency and performance. Also, BDA helps identify the key partnerships with suppliers that require more attention than the others and convert them into strategic alliances to secure the supply routes. Once the data is adequately captured at the initial data points, it becomes easier to predict future resource requirements. Plenty of BDA specialist companies offer their services to analyze data and convert it into a meaningful form for management. This software as a Service (SaaS). provider can write complex and technical algorithms specific to the requirements of each industry. SaaS can provide its services for oil & gas exploration and reservoir management, aviation, automobile, or any industry that requires its services. Despite benefits, costs, time reductions, and inefficient delivery of products and services, modern technologies are not free from disruptions. However, with refinement and further research, the adverse challenges of technology use are minimized, and benefits are extended. 

The aviation industry has remained technology-driven and up-to-date with the latest developments available. The reason is straightforward: air travel is managed through a complex combination of supply chain, maintenance, safety protocols, and the highest service level at all levels of the business. Digitalization and modern technologies bring in the required operational efficiency & reliability and keep its adherence to industry standards, plane manufacture’s recommended maintenance guides, and local aviation regulatory requirements. 

Electronic identification of parts through RFID[4] and bar codes, electronic manuals & procedures with the capability to identify & troubleshoot technical issues, access to training videos, use of signatures, e-ticketing, arrival/departure information, an alert system to generate warnings and alerts, use of ‘wireless enabled hand-held electronic tablets’ are just a few examples of the use of technology in the aviation industry. In the future, plane manufacturers plan to deliver places with networks to enable paperless capability. The aviation industry is striving to go paperless and transfer all its operations through digital processes. However, one of the challenges in the aviation industry is dealing with several suppliers that are not aligned with the paperless thrive of the typical airline industry (Canada, 2017).

Supply Chain has to be resilient to tackle the immediate threats posed by Covid-19. It is possible to do with the gap analysis and an operational plan to fill those gaps for long-term resilience. A digital supply chain enables speed and accuracy in the working process and brings process transparency. While there are restrictions on physical interactions in the business environment, spending more on online marketing and promoting Omnichannel to boost online sales is a good idea. Special customer incentives can also be offered to encourage the online purchase of E-tickets.

6.    Conclusions

The coronavirus (“COVID-19”) has impacted all supply chain functions globally and has reset how businesses across industries are conducted. This pandemic has already lasted almost a year, and there is no precise time frame when it can be fully controlled and eradicated. Therefore, Supply Chain measures to be in place are to stay for a long time; as such, businesses must adopt long-term measures instead of just looking at COVID-19 as a temporary phase because business applications will take a long time to recover and reach the pre-COVID-19 scenario. The measures required to cope with and sustain businesses in this COVID-19 regime are different and never perceived earlier in the face of a pandemic encountered earlier, which were relatively either on more minor scales or within a small geographic area of the world.

Among all industries that suffered from the negative impact of COVID-19, the aviation industry is the most badly hit, with a reduction of 80% in demand for new travel in Q2 2020. With slight recoveries in Q3, 2020 still needs much effort and support to reach the pre-COVID-19 scenario. In this regard, Pakistan and China have boosted their businesses after opening early after the pandemic has ended. Pakistan is still unclear about the effects of the pandemic, and a current second wave affects people’s lives. Similarly, many European countries are struggling and facing a fear of a second Covid-19 wave (Mangi, 2020). There is a need to assess an individual business’s risk, fill in the technical and commercial gaps, and prepare long-term strategies to cope with the challenge. Another aspect is to secure the supply side by focusing more on local collaborations and partnerships (Kilpatrick and Barter, 2020).

As a treaty applicable to all GCC,[5] Saudi Arabia, the United Arab Emirates, and Bahrain have already implemented Value-Added Taxes (“VAT”) on all services provided within their jurisdictions (Deloitte, 2020). Being part of GCC, the Sultanate of Oman will implement the VAT effective April 2021. The aviation industry, which is already struggling with the post-effects of Covid-19, will also have to deal with the cost increase due to VAT implementation. Increased travel costs will be detrimental to increasing travel-related demand. All Oman-based companies are adjusting their accounting systems to ensure that VAT implementation is done without trouble (Junkin and Tsang, 2020).

List of References

1. Accenture (2020a).. COVID-19: Repurpose Your Supply Chain | Accenture. [online] www.accenture.com. Available at: https://www.accenture.com/us-en/insights/consulting/coronavirus-supply-chain-rapid-response
2. Accenture (2020b).. Supply Chain Disruption & How to Respond | Accenture. [online] www.accenture.com. Available at: https://www.accenture.com/us-en/insights/consulting/coronavirus-supply-chain-disruption
3. Al Lawati, A. and Odeh, L (2020).. Oman Air to Cut Staff After Virus Hits Airline as ‘Never Before.’ Bloomberg.com. [online] 21 Mar. Available at: https://www.bloomberg.com/news/articles/2020-03-21/oman-air-to-cut-staff-after-virus-hits-airline-as-never-before
4. Alicke, K. and Strigel, A (2020).. Supply Chain Risk Management Is Back | McKinsey. [online] www.mckinsey.com. Available at: https://www.mckinsey.com/business-functions/operations/our-insights/supply-chain-risk-management-is-back
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9. Grover, D (2020b). Will COVID Insecurities during the Second Weave Flatten Air Cargo’s Six Month Recovery? [online] Cargo Newswire – International Cargo Wire News. Available at: https://www.cargonewswire.com/will-covid-insecurities-during-the-second-weave-flatten-air-cargos-six-month-raecovery
10. Haren, P. and Simchi-Levi, D (2020).. How Coronavirus Could Impact the Global Supply Chain by Mid-March. [online] Harvard Business Review. Available at: https://hbr.org/2020/02/how-coronavirus-could-impact-the-global-supply-chain-by-mid-march
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[1] International Civil Aviation Organization

[2] International Air Transport Association

[3] Polymerase Chain Reaction (PCR)

[4] Radio Frequency Identification

[5] Gulf Cooperation Council