Winter looks set to be tough for European carriers as the pandemic continues and travel confidence is likely to remain suppressed. Low fares will be key to stimulating demand as travel restrictions are likely to continue.
With revenue still suppressed, airlines will have a tough winter ahead. During what is traditionally the offseason in Europe, the pandemic is likely to make operating conditions difficult. Although demand was beginning to return this summer, winter could be a different story. COVID-19 cases could rise, and further variants may develop, reducing travellers’ willingness to fly. With numerous governments ending furlough support, including the UK, labour costs will inevitably rise and frugal decisions must be made. A delicate balance must be struck between serving numerous destinations and keeping operating costs under control. A cautious approach needs to be taken this winter, and airlines must be nimble to ensure survival.
Reluctance to travel could persist
Reluctance to travel is likely to persist into winter, especially if cases remain high and travel restrictions remain in place. Airlines could struggle to fill seats.
Passengers may continue to delay travel plans this winter due to high uncertainty. Even though Europe’s vaccine rollout is progressing well, the Delta variant is a concern. With some countries struggling to contain the virus, travel restrictions look set to remain. Planning trips will continue to be complicated further by ever-changing restrictions and the requirement for negative COVID-19 tests for entry into many territories. Furthermore, travel restrictions are the second biggest deterrent to travel, with 55% of respondents in a GlobalData Poll* saying that this would deter them from travelling. Therefore, travellers will continue to be cautious this winter. Route networks must focus on destinations with limited restrictions and an agile/responsive approach must be taken.
Low fares are key
Competition among airlines in Europe was fierce pre-COVID and often price was the determining factor for travellers when selecting an airline. With demand uncertainty likely this winter, encouraging booking will be a key goal.
Lowering fares to stimulate demand will be a tactic deployed this winter to fill seats. Hopefully, this will attract the 57% of European respondents who rated price as the most important factor when selecting an airline brand, according to a live GlobalData poll**. Price will be critical to encouraging travel in the interim. Low-cost airlines will hold the upper hand. With low-cost bases, they can afford to offer attractive fares to encourage travellers. Low-cost carriers will likely be the dominant airlines this winter. With travellers continuing to travel closer to home, the expansive European network of these carriers should work to their advantage.
* GlobalData poll, 1,364 respondents, 17 November 2020 to 18 May 2021
** GlobalData poll, 206 European respondents, live since 19 April 2021