- With revenue still suppressed, airlines have a tough winter ahead of them.
- New COVID-19 variants could potentially reduce travelers’ willingness to fly.
- Labor costs will rise and financially difficult decisions must be made.
European airlines are set to face a tough winter due to the ongoing pandemic and travel confidence likely remaining suppressed. Low fares will be key to stimulating demand as travel restrictions are likely to continue.
With revenue still suppressed, airlines will have a tough winter ahead. During what is traditionally the offseason in Europe, the pandemic is likely to make operating conditions difficult.
Although demand was beginning to return this summer, winter could be a different story. COVID-19 cases could potentially rise, and further variants may develop, reducing travelers’ willingness to fly. With numerous governments ending furlough support, including the UK, labor costs will inevitably rise, and financially difficult decisions must be made. A delicate balance must be struck between serving numerous destinations and keeping operating costs under control. Airlines must be nimble to ensure survival.
Passengers may continue to delay travel plans this winter due to high uncertainty. Even though Europe’s vaccine rollout is progressing well, the Delta variant is a concern. With some countries struggling to contain the virus, travel restrictions look set to remain. Planning trips will continue to be complicated further by ever-changing restrictions such as the requirement for negative COVID-19 tests for entry into many territories. Furthermore, travel restrictions are the second biggest deterrent to travel, with 55% of respondents in the latest industry poll stating this reason for avoiding traveling. Route networks must focus on destinations with limited restrictions and an agile/responsive approach must be taken.
Competition among airlines in Europe was fierce pre-COVID and often price was the determining factor for travelers when selecting an airline. With demand uncertainty likely this winter, encouraging booking will be a key goal.
Lowering fares to stimulate demand will be a tactic deployed this winter to fill seats. This could attract the 57% of European respondents who rated price as the most important factor when selecting an airline brand, according to a recent poll. Price will be critical to encouraging travel in the interim and low-cost airlines are likely to be the dominant airlines this winter. With travelers continuing to travel closer to home, the expansive European network of these carriers should work to their advantage.
