October 26, 2016
BEIJING â€" With a GPS chip in every smartphone and real-time access to the internet, online taxi-hailing has revolutionized the way people travel. The possibility that car owners can earn money from the use of their vehicles via a mobile application gave birth to Uber, the breakthrough ride-sharing company based in Silicon Valley.
The U.S. company's success would inevitably lead to Didi Chuxing, China's leading car-sharing operator, which acquired Uber China earlier this year. Founded in 2012, Didi Chuxing rose over four or five years to become Chinaâ€™s online transport giant as Uber grew to dominate this market in all other parts of the world.
As with Uber elsewhere in the world, the rapid development of Didi has had a huge impact on Chinaâ€™s traditional taxi business, and has pushed the sharing economy to the forefront in various sectors. According to Didiâ€™s data, in 2015, Didi drivers in Shanghai alone managed to achieve a total turnover of 3.3 billion RMB ($487 million).
The revolution in the transport model has brought about a structural change in the market, but there is political resistance. Although Chinaâ€™s national Ministry of Transport has come out in favor of online taxi-hailing apps, and Premier Li Keqiang continues to encourage the use of internet technology to create innovation, a very different reaction is happening on the local level. Various cities have announced new regulations that would fundamentally restrict the development of mobile ride-sharing apps.
Local governments in Beijing, Shanghai, Chongqing and Chengdu all set tighter restrictions on vehicle size, licenses, as well as requiring driverâ€™s household (residency) registration and the number of years of driving experience. Take Beijing as an example. To start with, a resident of the traffic-plagued capital can only buy a car through a lottery system. The Didi driver is also required to possess a Beijing household registration as well as the cityâ€™s vehicle license. This limits, right from the source, the supply of cars as well as eligible drivers.
This is a typical example how a disruptive transportation model is bound to encounter restrictive policies from local authorities in China, even if the essence of the sharing economy is to use internet technology to direct surplus productivity toward a more economical and efficient distribution of resources. Online public opinion is almost all one-sided: in favor of more apps that challenge traditional taxi systems and improve service.
In the U.S., where the car-sharing model was born, there are also the prototypes for how it is challenged. Take a lawsuit initiated by the Illinois Transportation Trade Association as an example. The association, representing the interests of Chicagoâ€™s taxi drivers, claimed that because of the existence of online hailing services their revenues have dropped 50%.
However, the United States Court of Appeals for the Seventh Circuit decided that Uber, or its top American competitor Lyft, are different from regular taxicabs. They do not require fare supervision similar to that of the latter, nor do their drivers need a taxi operation license.
In Judge Richard Posnerâ€™s verdict, he stated that: "Indeed, when new technologies or new business methods appear, a common result is the decline or even disappearance of the old. Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt. Instead of taxis we might have horses and buggies; instead of the telephone, the telegraph; instead of computers, slide rules. Obsolescence would equal entitlement."
The American governmentâ€™s encouragement of innovation and market freedom has helped contribute to Uber's founding and to its becoming the world leader. Chinaâ€™s central government has declared its intention of making the state the world's leader in "innovation of the masses," but local governments are challenging that with restrictive policies and regulations.
What will happen with car-hailing apps in China in the face of such tight restrictions? Many drivers who fail to conform to all requirements will give up trying, but others are bound to start operating on the black market. Another possibility will be that the taxi-hailing apps themselves will go underground, like in those cities in the world where Uber is still illegal. In this case, neither drivers nor passengers nor operators of the app will have any legal protection.
The Economic Observer is a weekly Chinese-language newspaper founded in April 2001. It is one of the top business publications in China. The main editorial office is based in Beijing, China. Inspired by the Financial Times of Britain, the newspaper is printed on peach-colored paper.
Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.
October 17, 2021
It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.
More than a year later today, experts believe that air traffic won't return to normal levels until 2024.
But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:
Cleaner aviation fuel
The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.
While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.
Fees imposed on the airline industry should be funneled into a climate fund.
In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.
Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.
High-flying ambitions for the sector
Hydrogen and electrification
Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.
One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.
Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.
New aircraft designs
Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.
International first class will be very nearly a thing of the past.
The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.
Aerial view of Rome's Fiumicino airportcommons.wikimedia.org
Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.
The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.
Data privacy issues
However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.
Auckland Airport, New Zealand
The billion-dollar question: Will we fly less?
At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.
Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.
40% of Swedes intend to travel less
According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.
But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.
At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.
From Your Site Articles
- How Persian Gulf Airlines Surged To Top Class Of Travel Industry ... ›
- How Countries Are Coping With A Tanking Tourism Industry ... ›
- COVID Recovery? End-Of-Summer Checkup On Travel Industry ... ›
Related Articles Around the Web
Premium stories from Worldcrunch's own network of multi-lingual journalists in over 30 countries.
German public international broadcaster
SOUTH CHINA MORNING POST
South China Morning Post (SCMP) is an English-language daily published in Hong Kong. Co-founded in 1903 by the British journalist Alfred Cunningham, the newspaper has an estimated circulation of 104.000. It is currently owned by Alibaba group.
La Repubblica is a daily newspaper published in Rome, Italy, and is positioned on the center-left. Founded in 1976, it is owned by Gruppo Editoriale L'Espresso.
E24 NÃ¦ringsliv is a Norwegian, online business newspaper launched on 18 April 2006. In the course of the first week of operations it became the largest business web site in Norway. In week 46, 2008, it had 575,000 unique users per week.
Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!