Since the beginning of the pandemic (COVID 19) airline companies were the most affected. We all know that without flights touristic destinations suffer a lot. Professionals within tourism industry are trying to foresee when and how air traffic will recover. So far there are many aspects and scenarios around this topic.
Lufthansa CEO, says the post COVID era will be with less flights and less staff. He states “We will probably regain our footing in 2023”. Ryanair CEO, states that if Government forces airlines to “cut” the middle seat either the state has to pay for the loss of revenue or his companies planes won’t fly. Alexandre de Juniac CEO of IATA, believes that airline companies can absorb the cost of having the middle seat off but just in the short term period. If this measure lasts for long time then the industry will change the way it operates.
There are two critical questions that need to be answered at the moment. The first one is when and how fast the air traffic will bounce back and the second how expensive the tickets will be the day after.
When and how?
Industry experts believe that a coordinated fashion approach to be followed from European countries to facilitate recovery. Eurocontrol, the pan-European civil-military organization, has designed two scenarios to depict the possible impact of the extent to which “COVID-compliant operational procedures” for airlines and airports are common across all European States. See the report here.
Airfares and hotel rooms rates are fluctuating based on supply and demand equilibrium. If demand is low prices go down and vice versa under the condition that supply remains stable. At the moment, demand, the desire of people to travel has been affected but hasn’t disappeared. A research made by LuggageHero, reveals that 57% of travelers are planning to go on holidays the next two months.
On the other hand, supply might be affected as Governments will ask airline companies to “cut” the middle seat. In addition, airlines might decide to offer less flights to destinations trying to eliminate risk, costs, and balance demand with supply. Air carriers will definitely focus on popular destinations where demand meets supply faster. In this case, a price “war” can begin driving fare tickets down. Right now we monitor drop of prices. For example, a ticket from Athens to Mykonos, in August, costs just 83 euro when last year the same ticket cost approximately two times more.
Seth Kaplan an aviation analyst, told LonelyPlanet that there is a high probability that prices will stay low as airlines will try “provoke” demand and lure people travel again.
It’s obviously a difficult equation to solve. Air traffic recovery depends on various factors that change very fast. For the hotel industry is very crucial to monitor frequently the availability of flights and the fluctuation of rates as this will be an indicator of demand. Air traffic recovery is crucial for the hotel RevPar recovery as well!