Are Airlines creating a crisis as recovery slides?

IATA

The International Air Transport Association, which represents virtually all major airlines globally, has said that you can forget 2023 for airline recovery, it’s already slipped to 2024.

The problem is that nobody actually wants to fly right now. There’s an accepted pent up demand for visiting friends and family, but business travel is dead. Even with the pent up demand for wanting to see friends and family, for the vast majority, getting into a metal cylinder with a bunch of unknown people, sitting for 1- 6 hours in a mask and the potential trouble from the militant “won’t wear a mask after takeoff” types, it’s putting people off.

The militant mask removers – twice in the past ten days have found themselves on the sharp end of airline policy. Two flights turned round and went back to where they came from and threw the passengers off, one a Delta A330.

The spectre of furlough and unemployment schemes ending, mass redundancies and other job losses, is hardly encouraging people to spend money on airline tickets.

Airlines themselves aren’t exactly helping things, many refusing refunds or taking weeks and even months to even acknowledge requests. Airlines and their “non refundable” policies they have legally been able to use for years, have had to offer re-booking waivers, but be careful, many of these aren’t worth the screen space they take up.

To be fair the airlines with few exceptions – Southwest being one of them – have been pulling the wool over their own eyes. They’ve been insisting three years is likely, but Southwest in the US and leaders at a few smaller airlines in Europe, have been saying five, just to get back to 2019 levels.

Airlines are busy making a potential crisis this winter

Capacity watchers will be seeing the ever growing schedules of many airlines and thinking one of two things. Either airlines know what they’re doing and it’s a good sign, or they’re so desperate to get airborne, they think if they supply capacity, people will fly.

The rush to expand routes across international boundaries is frankly staggering. Passengers to and from the United States face up to a month of quarantines – two weeks either side of their travel on arrival and return. Who is going to do that?

Australia is in a worsening crisis for a second time, China is in lockdowns in some remote places, quarantines are required in others, everyone has to test negative on arrival or have certified doctors certificates saying they are covid-free. Similar restrictions exist around the world. If you want to fly these routes, often on bargain fares it has to be said, are you ready for the restrictions? Is it worth it?

Yet it isn’t happening. People are not booking long haul flights. British Airways, Virgin Atlantic, Lufthansa, Air France, United, Delta, are all flying aircraft barely a third full, on low priced tickets.

You know, and I know that anything under 75% is loss making when it comes to aircraft seat sales. They’re running at 33% and often much less.

T5 is normally heaving with passengers this time of year

If you were in any doubt about how little people are flying, Heathrow Airport is a prime example of what’s wrong.

Friends on Friday went to Malta on a BA flight. Terminal 5 – once heaving and exclusively used by British Airways, is now used by BA, Iberia, American Airlines, Qatar Airways, and for the first time ever, a non Oneworld member, China Southern Airlines A380’s will be using the terminal from tomorrow.

The terminal was described as “shockingly empty”. It was July 31st, peak summer season. The flight to Malta was mid-morning, it was half full.

This scene is being repeated almost everywhere. Flights that were once on A320’s are now on E195’s or CRJ600’s – and they’re not full. Birmingham Airport is like a ghost town.

Aircraft like this are filling the roles used by A320’s just months ago, and they’re still half full if that

So airlines are pushing flights and seats – and people aren’t buying them. Many of the flights that were booked for this month are quietly being cancelled, services that were due to be reopened haven’t been.

And the pressure builds. Emirates start to expand dramatically in mid-August. Qatar is also doing the same.

United announced a raft of resumed European, Australian and Chinese routes. Lufthansa has opened flights to New York and more are on the way.

Yet – the question remains – who is flying on these aircraft? The answer seems to be almost no one.

This is a disaster in the making. Costs far exceed income and massive losses will be the only result. Eventually the back up cash and the raised bonds and debt will run out. Keep flying loss making flights and airlines will face a cash and income crisis come the dark winter months, that they’ll not easily survive.

As I write this a BA Press Office email has just arrived announcing dozens of new routes around Europe to holiday destinations.Tickets at £62 return, prices that are rock bottom because tax and airport charges will be around 70% of that figure. This is desperation.

I am genuinely concerned over the way airlines are behaving. The “Build it and they will come” approach isn’t going to work. Airlines are going to have to face an even harsher reality if they carry on flying regardless.