Due to the ongoing pandemic, European airlines are in for a difficult winter, and travel confidence is likely to remain low. As travel restrictions are likely to remain, low fares will be critical to stimulating demand.
Airlines will face a difficult winter with revenue still suppressed. The pandemic is likely to make operating conditions difficult during what is traditionally Europe’s offseason.
Although demand was beginning to return this summer, the winter season could be different. COVID- 19 cases could potentially increase, and new variants could emerge, reducing travellers’ willingness to fly.
Several governments, including the United Kingdom, are discontinuing furlough benefits; labour costs will inevitably rise, and difficult financial decisions must be made. It is necessary to strike a delicate balance between serving multiple destinations and keeping operating costs under control. Airlines must be agile in order to survive.
Due to the high level of uncertainty, passengers may continue to postpone their travel plans this winter. Even though Europe’s vaccine rollout is going well, the Delta variant is a source of concern. Travel restrictions are likely to remain in place as some countries struggle to contain the virus.
Trip planning will be made even more difficult by ever-changing restrictions, such as the requirement for negative COVID-19 tests for entry into many territories. Furthermore, travel restrictions are the second most common deterrent to travel, with 55 percent of respondents in the most recent industry poll citing this as a reason for not travelling. Route networks must focus on destinations with few constraints, and an agile/responsive approach is required.
Prior to COVID, competition among European airlines was fierce, and price was frequently the deciding factor for travellers when selecting an airline. With demand likely to be uncertain this winter, encouraging booking will be a key goal.
Sadly, for the airlines, lowering fares to stimulate demand will be a tactic used to fill seats resulting in even heftier potential losses. According to a recent poll, 57 percent of European respondents rated price as the most important factor when choosing an airline brand.
In the meantime, price will be critical to encouraging travel, and low-cost airlines are likely to be the dominant carriers this winter. With travellers continuing to travel closer to home, these carriers’ extensive European network should benefit them.
By Joe Cusmano
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