Gavin Eccles 2022

Back in March 2021, we spoke to Managing Consultant and Aviation Expert Gavin Eccles, who addressed growing concerns across the industry about the impact of flight restrictions on travel. Fast-forward to July 2022, and we have seen commercial airlines and flight travel go from zero to 100, both in terms of demand and capacity.

This swift transition from downturn to recovery has significantly impacted both human resources and pricing across the industry, raising new concerns around cancellations and the impact on consumer confidence, as well as whether the sky-high prices we’re seeing this summer will hold during the winter period.

To address these concerns, we decided to catch up once again with Gavin to get his take on the challenges commercial airlines are facing today and what the impact may potentially be in the near future.

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Back in winter 2021, we didn’t anticipate just how quickly airlines would increase capacity over just a few short months leading to summer 2022.

Thinking about the broader travel industry, how optimistic do you feel about business performance in 2022 and why?

Air travel has really boomed this year! If you look at summer 2022 compared to 2021, aviation is approximately 14% down on total seat capacity vs 2019. When you consider that China is not contributing to international travel currently, we can see that capacity and demand recovery is moving much quicker than consultants suggested back in 2020.

Currently, capacity is at around 100 million seats per week, which is a threefold increase compared to 2021. Back in 2020, we had around 15,000 aircraft parked, and by February 2022 we were down to around 8,000.

Back in winter 2021, we didn’t anticipate just how quickly airlines would increase capacity over just a few short months leading to summer 2022. The industry also didn’t consider the implications such a rapid increase would be in our heavily regulated industry where recruiting and hiring takes more time. Taking this into consideration, you can see why there is some concern that airlines have increased capacity so dramatically.

Having said this, airlines have been agile in responding to the human resources challenges by removing a little capacity in relation with staff shortages. Overall, airlines have been bullish with capacity this summer, and there is certainly an optimistic outlook for the summer months. However, there is some concern around what may unfold from November onward, when consumers may start to feel the pinch of inflation.

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We know the summer is proving to be a euphoric period for travel, but are there any concerns for the autumn and winter period?

Capacity is looking okay, and we don’t expect airlines to reduce it for the winter months. What we will start to see is inflation kicking in, and the impact on disposable income to travel. Prior to the pandemic, travelers were accustomed to second or third holidays during the winter period because fares were low and the overall cost of travel was cheaper.

The elephant in the room now is fuel, and some airlines may try to use this as an excuse to maintain high prices during the low season, although the good airlines have already hedged for 2022 and 2023. Back in 2019, the fuel cost was $68 a barrel, but now it's $102, a 50% increase. The predictions are that the price may drop to around $80 or $90 a barrel by 2023. But for airlines who haven’t hedged, the question is, how will their costs be impacted? Will we see surcharges if airlines choose to use rising costs as a way to increase revenue? Or, will fares go up?

Ryanair had a press release in early July where their CEO announced that their average fares (currently €40) will now be increased to €50. The reason for that is because the current prices are the same as the Stanstead Express to London.

This announcement could be seen as a bellwether for other airlines to consider their pricing, and it’s particularly interesting when you consider the budget airlines drove prices down in the first place. But if anything, this indicates that perhaps air travel (certainly in terms of low-cost airlines) has been too cheap for too long.

We’re seeing record-high prices in summer 2022. Is this justified given the staff shortages and travel experiences unfolding?

There has been a great deal of negative press surrounding endless queues, flight delays and cancellations. The reality, however, is that a small number of travelers are affected relative to the bigger picture. Approximately just 2 to 3% out of 100 million passengers have experienced flight cancellations over the summer of 2022. And, it was 1% back in 2019. 

For those who have had to cancel, it’s understandable there would be a negative outlook on airline customer service. But the reality is that most people traveling are dealing with the inconvenience of the queuing rather than cancellations.

The staffing challenges we are seeing today prove that our industry is very regulated. Airport security personnel need clearance, and it also takes time to train pilots and ensure they have the hours required for their role. Of course, we need regulations to ensure the safety of passengers, but companies need to plan for the peaks and troughs in demand.

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The reality, however, is that a small number of travelers are affected relative to the bigger picture. Approximately just 1% out of 100 million passengers have experienced flight cancellations over the summer of 2022.

For those who have had to cancel, it’s understandable there would be a negative outlook on airline customer service. But the reality is that most people traveling are dealing with the inconvenience of the queuing rather than cancellations.

What can the industry do to better plan for the peaks and troughs of demand?

In the summer you have major spikes, but airlines need to plan on the basis of just three months out of the year being extremely busy, and find ways to be more flexible with contracts and staff. A temporary workforce and leasing model, implemented during a 2 to 3 month period of peak demand, could be a viable option to tackle these challenges.

But while there may be scope for different airline companies to work together and have temporary workforce and aircraft contracts in place, branding plays a significant role in establishing consumer trust in the airlines’ safety and reliability. This begs the question of whether airlines can just readily lease out aircraft to other companies that may not share their values, and what the impact would be on consumers.

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.

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