Will Aircraft Supply Meet Pent-Up Travel Demand? Aviation Expert says "Yes!".
Since COVID-19 became a global pandemic, our industry research shows Hoteliers have been consistently concerned with the impact of flight restrictions on travel and, subsequently, hotel bookings. The big questions on everyone's mind are: 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 commercial airlines today, and what we can expect when travel restrictions are lifted.
How soon can Hoteliers expect air travel to return to pre-COVID levels?
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.
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 for 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 for 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 narrowbodies. 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. Goes without saying that the pandemic has driven airlines and airports to ramp up their flexibility to respond to rapid market changes.
What can the aviation industry (and Hotels for that matter) learn from the events of the pandemic and bailout programs?
For airlines that 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.
The expectation for 'Business Travel' continues to decline, while expectations for 'Leisure Travel' steadily increase. In your view, why is this the case?
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.
About GuestCentric
GuestCentric is a leading provider of cloud-based digital marketing software and services that help extraordinary hoteliers promote their brand, drive direct bookings and connect with customers on all digital platforms. GuestCentric's all-in-one platform provides hotels with the only unified solution for managing their guests' online journey: award-winning, high impact websites; an integrated, easy-to-use booking engine; social media marketing and publishing tools; a GDS chain code and a channel manager to offer rooms on Amadeus, Booking.com, Expedia, Galileo, Google, Sabre, TripAdvisor and hundreds of other channels. GuestCentric is a proud provider of solutions that maximize direct bookings to hotel groups and independent hotels from collections such as Design Hotels, Great Hotels of the World, Leading Hotels of the World, Relais & Chateaux, Small Luxury Hotels and Small Danish Hotels. GuestCentric is featured on Skift Travel Tech 250, a list of the top 250 travel tech companies shaping the modern-day travel experience.
Melissa Rodrigues
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GuestCentric Systems
