For months into the pandemic, a worry in the industry was that nervous passengers might take some persuasion to get back in the air. After endless messaging about the danger of spending time in the close company of other humans, who would be comfortable spending hours cooped in a metal tube with strangers? There was even talk of a new normal comprising on-board social distancing and other measures to limit the virus’s spread, such as Perspex dividers and empty middle seats.
However, evidence from the USA – where domestic traffic has returned almost to 2019 levels – and elsewhere gives grounds for optimism that, once travel restrictions are removed and capacity restored, pent-up demand will see passengers flocking back. This might even be the case on international routes, where there has been the added concern that business customers – used to conducting Zoom meetings these past 18 months – might dispense with their frequent flyer cards.
An announcement this week that the UK was relaxing quarantine rules for travelers from the USA led to a surge in transatlantic bookings. Confidence has been growing in the industry that even long-haul markets might be poised for recovery, albeit a gradual one, as vaccine roll-outs make a difference. British Airways and Iberia owner IAG said this week that capacity would reach 45% of 2019 levels in the third quarter, and bounce back to 91% by the end of 2022.
IAG’s former boss – now head of the International Air Transport Association – Willie Walsh this week also weighed into the debate over travel restrictions. Countries that were taking a “zero-Covid” approach by closing borders, particularly in the Asia-Pacific region, were slow to appreciate the logical conclusion of that policy, he said. Trying to eliminate all risk of the virus – especially when vaccine rates were low – meant an almost indefinite ban on international travel, he suggested.
Walsh said Singapore’s approach – after virtually banning all but cargo flights 18 months ago – gave cause for hope. The city state, which is reliant on international trade and tourism, plans to slowly reopen its borders in September as most of its population is fully vaccinated. National carrier Singapore Airlines – largely grounded and deep in the red since the onset of the crisis – said this week that it planned to be serving around half its 2019 network by the end of September.
Elsewhere, there was also promising news. In Brazil – a country that has suffered a high number of Covid-19 hospitalizations and deaths – Gol said it saw increased demand in the second quarter, although revenues and passenger numbers are still two-thirds down on 2019. The airline said that progress on vaccinations was giving Brazilians confidence to return to their normal routines, including domestic travel.
The feel-good factor is also filtering through to manufacturer backlogs after months during which Airbus and Boeing were seeing more cancellations than commitments, while other customers deferred deliveries as they struggled for cash. United Airlines, Southwest and Ryanair all recently confirmed large orders, with German leisure airline Condor becoming the latest to bet on recovery, with a deal for 16 Airbus A330neos, seven of which it will buy with the remainder on lease.
The airframers too are in more bullish mood. The return to service of the 737 Max has given Boeing the chance to claw its way out of its deepest financial hole, while Airbus has talked about ramping up monthly production of its A320 family to more than 70 a month by the middle of the decade, boosted by the assurance that many carriers will begin replacing some widebodies with ultra-long-range narrowbodies such as the A321XLR.
Not all in the supply chain remain convinced, having been badly jolted in 2020 when airframers slammed on the brakes. Engine makers Safran and Raytheon Technologies have been among those expressing doubts the market can sustain such levels of production. However, this week, Airbus boss Guillaume Faury insisted the manufacturer’s ambitions were realistic, noting that the A320 order book alone – 5,666 at the end of June – equates to more than five years of output at current rates.
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