Stubborn government restrictions rather than weak passenger demand are the main factor holding back the return of air travel. Discuss.
What might sound like an exam question has been a heated debate among those trying to predict the trajectory of recovery. For months, the International Air Transport Association as well as airline and airport chiefs have been arguing that people just want to fly. What is stopping them are outright border closures or requirements so onerous, expensive and liable to change at the drop of a hat that would-be travelers are put off booking. Remove those, they say, and passengers will rush back.
Exhibit A has been the US domestic market where, until recently, passenger numbers and flights were rebounding to 2019 levels. However, in the past week or two, worries over the spread of the Delta variant appear to be keeping folk at home. Southwest Airlines this week warned a recent drop in bookings, as well as booking cancellations, would likely push the low-cost carrier into the red for the third quarter. Frontier Airlines also admits the new Delta threat will impact its earnings.
Whether this is a blip or a trend for the rest of the year is unclear. Only recently, amid projections of a major bounce-back in 2021, some US airlines were admitting the opposite problem: stranded passengers because of a lack of pilots – thousands having been furloughed at the start of the pandemic. What appears to be clear though is that airlines cannot simply point the finger at over-cautious governments for the crisis in the industry. Passenger confidence plays a large part too.
Across the Atlantic, politicians are being blamed for a sluggish summer, more than six months after vaccine roll-outs led many to hope a full recovery would be under way by now. Those in the UK – Europe’s biggest leisure market – are singled out for ever-changing travel rules, with TUI the latest airline to cut capacity. London’s Gatwick Airport this week called on the UK government to simplify restrictions it said were behind much lower bookings than countries such as France and Germany.
Elsewhere, the picture is mixed. In Brazil – a Covid-19 hot spot as recently as June – traffic has been picking up, with the airline Azul reporting rising traffic and saying it is positive about a recovery in the coming months. However, in Asia-Pacific the picture remains bleak, with Cathay Pacific stating this week that the fast-spreading Delta variant makes even short-term planning a challenge, and New Zealand’s prime minister confirming that the country’s borders will remain shut into 2022.
A glimpse into how the recovery might see new airline business models emerge came this week with the launch of JetBlue’s first transatlantic flight, from New York Kennedy to London Heathrow. The move is notable for three reasons. JetBlue is launching the service at a time when US residents can visit the UK, but not the other way round. It is using not a widebody, but an Airbus A321LR, and, although a low-cost carrier, it is offering 24 lie-flat, first-class seats, as well as 114 in economy.
The London to East Coast US market is one of the most hotly contested air corridors, and has long attracted would-be disruptors, from Concorde to all-business operators such as Silverjet and MaxJet, and from Freddie Laker in the 1970s to Norwegian. To say it has been paved with failures would not be an exaggeration. And JetBlue is not the only post-Covid entrant. Norway’s Norse Atlantic Airways plans to launch its Boeing 787 transatlantic operation by summer 2022.
The transatlantic market is crucial for British Airways and Virgin Atlantic – the latter reported to be seeking a stock market flotation later this year – with lucrative regular business travelers the biggest prize. Aside from cargo operations, and a recent flurry of newly-opened holiday routes, both carriers have been near dormant for the past 18 months, and will be desperate to rebuild their fortunes, including on the North Atlantic.
It is unlikely they – or their North American counterparts – will look kindly on these interlopers. But established airlines do not have a right to passengers, and if the likes of JetBlue and Norse Atlantic offer reliable service and competitive fares, it may be that budget-conscious business travelers – as well as backpackers, city-breakers, and those visiting family and friends – will be tempted. After all, back in the 1980s, it was an audacious Richard Branson that took on British Airways in these skies.
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