Throughout the Hotelier PULSE series, Hoteliers have been consistently concerned with the impact of flight restrictions on travel. The big question on everyone’s mind is, will there be enough aircraft supply to support the pent-up demand? And what will be the impact on Hotels worldwide? To answer these questions, we catch up with Aviation expert, Gavin Eccles - Managing Consultant & Professor of Aviation and Tourism, to get his take on the status of airlines to today, and what we can expect when travel restrictions are lifted.
Where we have a problem at the moment is with the demand, and in this respect, this is where we are on the same boat with Hotels.
January 2021 Bookings were just 21% of those in the same period last year. In your opinion, how has the uncertainty around airline travel played a role in this?
The current state of Aviation closely mirrors what is happening in the hotel industry today. We have the capacity, but not the demand because the markets are not open. At the start of 2021, during the winter booking season, airlines planned to fill 80 million seats in March 2021.
However, each week airlines continue to cut their capacity because demand remains low while borders are closed. On the 15th of February 2021, airlines had around 20 million less seats registered on the system compared to January 2021. The only locations where we see exceptions is in China, the US, Russia, and India, where there are still reasonable levels of air travel on domestic routes.
Following the UK government’s roadmap to reopen the economy, there is talk that by the end of 2021, we could achieve around 50% of 2019 market levels. However, we could also just have 13% by the end of the year simply because we don’t know what will happen next in terms of borders reopening and how the vaccine rollouts will continue. Most importantly, we need to put confidence back into the consumer to travel again.
It’s important to note that we don’t have a problem with the supply. Airlines are ready to go. Where we have a problem at the moment is with the demand, and in this respect, this is where we are on the same boat with Hotels. No consumers are taking a leap of faith to book at the moment because they don’t know what might be available.
The expectation for ‘Business Travel’ continues to decline, while expectations for ‘Leisure Travel’ steadily increase. In your view, why is this the case?
If we look back at what happened in September 2020, the low-cost airlines (such as Ryanair, EasyJet, and Wizz Air etc) were able to pick up faster. Why? Because these airlines operate under point-to-point models. So for example, if enough consumers need to fly direct from Lisbon to London and back, the airplanes are ready, and the borders are open, then there is really nothing to stop these airlines from restarting commercial activity.
In the third week of February 2021, following the UK’s announcement that international travel can restart again in mid-May, Easyjet announced that their flight bookings were 300% up compared to the second week of February. And, even more outstanding is that Easyjet Holidays have said they are up 600% compared to the week previously.
Now, you can imagine, the previous week’s bookings were very low, relative to where we would expect. But all of a sudden, with a little bit of positivity and a little bit of confidence, the market is booming. The level of pent-up demand for leisure is huge.
With travel anticipated to return in the summer months of June, July, and August, consumers across the Northern Hemisphere will most likely invest in holidays. So it’s obvious that leisure will bounce back during this period. Whether September, October, and November will reactivate the demand for business travel in 2021, remains to be seen.
How soon can Hoteliers expect air travel to return to pre-covid levels?
Since 2010, the airline industry was growing at around 5% growth year-on-year. The industry was forecasted to continue growing each year between 2019 and 2024. But as we know, the industry suffered a massive fall in 2020. The question now is, where will we go from here?
We’re in a period now where most people are saying that the industry will reach 2019 market levels in 2024. But if you think about it, that’s not growing. When you go back to 2019 levels, it means the next four years will have zero growth. So the industry has introduced the 2019 benchmark, with the aim to reclaim 50% in 2021, and then the next 50% between 2022 and 2023. However, this forecast does not negate the prevailing uncertainty.
But on an optimistic note, if it’s right that by the middle of June 2021 things can go back to normal, why can’t we return to 2019 levels faster? Hopefully this perspective gives you a picture where 2024 is the Holy Grail, but with the possibility that the industry could recover to 2019 levels even sooner.