Gavin Eccles

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.

About Gavin Eccles
Gavin Eccles has worked across the world to link Aviation and Tourism development and has been associated with airlines, hotels, airports, and tour operators. Previous roles included development in British Airways and consultancy projects for United Airlines, American Airlines, Qantas, and supporting the development of low-cost carriers to tourist destinations. In Portugal, Gavin has been the former CCO of SATA Azores Airlines, Advisor to the Board of Visit Portugal on aviation development and supported numerous projects with ANA Airports Portugal on opening international air routes to the country. With hotels, Gavin has worked with numerous chains and has had secondment positions at TUI. Gavin has been awarded a Master of Philosophy from the University of Surrey and an Honours Degree in Management from Sheffield Hallam University.

If most routes adopt the point-to-point model, does that mean now that hotels in secondary cities can look at a better recovery than they would have in the normal airline hub system?

Looking at the US specifically, we can see that the airline hubs of New York and Los Angeles have been suffering more in the current climate. What’s boomed is Jackson Hole and Palm Springs, which is currently one of the fastest growing airports in the world. All of this indicates that consumers, at least for now, don’t want to be in cities.

However, if things could go back to normal tomorrow, why would anyone not want to go back to cities? Are we really saying that when all vulnerable people are vaccinated we’re not going to go back to cities? Or that we won’t want to go and talk to people? That we will only want to go to Jackson Hole and Palm Springs, and never visit New York or LA again?

Although significant levels of air traffic have been rerouted in response to current demand, I can’t see this continuing when we have emerged from this pandemic. I am sure many of us are hoping to go back to more concerts, nightclubs, pubs, and other social gatherings.

It’s also important to consider where airlines will end up. There has been a vision about flying longer, and certain airlines such as Qantas were starting to look at flying from London to Sydney, and Sydney to London. With the A350’s and B777’s, these routes can happen. The question was do passengers want to spend 16, 17 or up to 19 hours on an aircraft, or do they want to go via Dubai, spend a couple of days, and then travel on?

2020 changed this hesitancy, because no one wants to fly over hubs at the moment. Airports are being challenged on how they can continue with social distancing and avoid Covid-19 spreads, etc. There has been talk that more passengers may want more point-to-point travel, but when the cities reopen, it’s likely the airports will follow. As I mentioned before, the supply is there, we are just looking at a different demand.

What are your expectations for air travel when government restrictions are lifted?

The Industry Air Travel Association (IATA) has proposed the IATA passport that allows passengers to share data inside an app. But although numerous airlines and governments have signed up to this project, everyone needs to be aligned for it to work on a global scale.

With the IATA passport, all your information is stored in an app, including paperwork. This is similar to what we have now with pre-clearance to make sure passengers are not on a ‘No-Fly’ list. If this information sharing can be done quickly and easily, then it allows airlines to more easily return to transfer hubs. The last thing airlines want is 2 to 3 hour queues in airports, because that means airplanes won’t be connecting with each other.

The ‘Block Hour’ of an aircraft means you can only fly so many hours. If you start delaying flights and procedures, the model of aviation will be challenged. So there needs to be integration between different stakeholders, associations, and institutions to align this procedure and make it work.

How will airlines respond to the spike in demand when restrictions are lifted?

Most airlines have restructured, planning which aircraft to remove long-term. So theoretically, even though airlines may not be flying, they know that they have X numbers of widebodies and Y numbers of narrow bodies. So the network planning is done, they just don’t know where they can send the aircraft until borders reopen. When that happens, it will probably take 2 to 3 weeks to get the airplanes moved from deserts to airports and resume normal operations.

If the demand is there, then the aircraft will be ready. What will be interesting is that airlines have now had to implement a short-term planning model. If we were living in normal times, airlines should really be planning for summer 2022 right now. However, the industry is planning for summer 2021, which is just 3 months away. So there is a huge change between airlines and airports flexibility.

Flexibility for the airline industry is going to be crucial when demand picks up again. So planning is going to change from what has been very traditional for the industry, where airlines typically plan one year in advance.

If the demand is there, then the aircraft will be ready. What will be interesting is that airlines have now had to implement a short-term planning model.

In the current climate, this could be a huge opportunity for the aviation industry - to keep pushing ancillaries through online and offline channels.

What do you think will change permanently in the airline industry from so little flying?

Similar to Hotels, the Aviation industry is currently pursuing alternative revenue streams, further developing a new concept called NDC ‘New Distribution Capabilities’. Airline companies are now trying to sell ancillaries.

The idea is to try to open up the internal Backoffice platform of an airline into a travel agency and basically give consumers the opportunity to book everything around their trip at the touchpoint. Going forward, and certainly in the current climate, this could be a huge opportunity for the aviation industry - to keep pushing ancillaries through online and offline channels.

What can the aviation industry (and Hoteliers for that matter) learn from the events of the pandemic and bailout programs?

For airlines which grew heavily over the last five years leading up to 2020, aviation leasing had become very trendy. Dublin and Singapore had become global aviation hubs and most of the major banks were involved in aviation leasing. In fact, the Bank of China is one of the biggest owners of aviation.

What this says is that maybe airlines were growing so quickly, because there had been a new market. In the old days, airlines would buy aircraft directly from the manufacturer. But what the industry has now created is a middleman, where you’ve got the manufacturer selling to the lessor which then negotiates with the airline.

That has given airlines the ability to just keep growing. Whilst this was working, everyone was happy. But when disaster struck, airlines appealed to governments for help to just stay alive. It just goes to show that when an airline doesn’t fly, the models were not right. We have too much of our costs associated with assets. So, I guess the learning here is that maybe we grew too quickly.

Which locations do you think will be the first to recover in terms of flight capacity?

As we discussed before, all the leisure routes will be the most likely to bounce back quicker, so all the lines between North and South where everyone is travelling for the summer. Of course that depends on when the transatlantic routes will reopen.

China was the largest outbound travel market in the world by the end of 2019, overtaking the US. So, the question now is, what’s happening there? Because they have been quite open domestically but have not been as open internationally. So it may like a tsunami when the Chinese borders reopen.

None of the Chinese airlines have needed bailouts, so it’s likely that China’s outbound strategy will be China-driven. The airlines are ready to fly, they just have not had an outbound strategy up until this point. On the other hand, Lufthansa, Air France and KLM - which are unified and were implementing big strategies into China - probably won’t restart as quickly. The big Chinese airlines will do the job of international airlines to get the Chinese consumers traveling again. 

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