James Gray, his wife Kate and their two children, Lucy and Ben, had been trying to escape on holiday for 18 months — but hadn’t got much farther than the garden of their Bedford home. “We booked to go to America last summer and this summer and had to cancel both,” said Kate.
The family finally got away last week on easyJet flight 2017 from Luton to Faro in Portugal. Kate posted her first pool pictures online a few hours later — shades on, cocktails in hand.
Airlines have been just as desperate to fly families such as the Grays to their holiday destinations. Now, after the worst slump in modern history, chief executives are daring to believe that passenger numbers will take off. “We’re going to find ourselves in a very, very positive situation very quickly. My glass is more than half full,” Johan Lundgren, easyJet’s boss, said last week. “We’re seeing the beginning of the end of the crisis,” added Emirates’ president, Sir Tim Clark.
Carriers hope that the government’s decision to scrap compulsory quarantine periods for double-vaccinated passengers arriving from amber countries across the EU and the US, coupled with the introduction of EU vaccine passports, will prompt a surge in bookings for short-haul and key long-haul routes. “We’re moving from the survival phase, through recovery, to growth,” said Lundgren. “In Holland we’re already flying more people than we did in 2019.”
After successfully trialling new technology to check vaccination status at Heathrow for passengers travelling to and from amber counties, including America, British Airways and Virgin Atlantic are cautiously optimistic that President Biden will soon revoke restrictions that prevent almost all Britons flying to the US. “The ball is back in Biden’s court,” said Shai Weiss, Virgin Atlantic’s chief executive. “The UK-US should be open. They are the leading countries in the world in dealing with the pandemic.”
Advertisement
But with form-filling and tests compulsory on many routes, and the virus still a threat in many countries, will passengers want to fly again? The evidence from the US and China suggests they will — in droves. Demand for domestic travel is back to 2019 levels and on popular routes exceeds 2019, according to the International Air Transport Association.
Analysts predict the same will happen in long-haul international markets. “After lockdowns eased, the first thing Americans who had saved money did was buy air tickets. I see the same thing happening on every safe international air corridor that opens,” said Henry Harteveldt of Atmosphere Research, a travel industry research firm based in San Francisco.
The early evidence on short-haul European routes suggests that Harteveldt is right. EasyJet will fly two-thirds of its usual schedule from now on and the figure will be 100 per cent by early next year, “provided the unjustified PCR testing regime in the UK, which adds on average £100 per passenger, is scrapped”, said Lundgren. Passengers from amber destinations, even double-vaccinated ones, have to take a PCR test two days after arrival.
In anticipation of a rise in demand, Lundgren has increased the size of his fleet at Gatwick, easyJet’s hub, from 66 aircraft in 2019 to 71, and acquired new slots. Ryanair will fly 67 per cent of its normal passenger numbers this month.
The easing of restrictions creates opportunities for BA because it has both short-haul and long-haul operations. As demand for European destinations rises, it can use large jets that usually fly long-haul. It is serving Athens, Larnaca and Rome with Boeing 787 Dreamliners that usually fly transatlantic.
Advertisement
Virgin Atlantic faces stronger headwinds since it flies only long haul. But Weiss pointed out that the airline was already benefiting from a boost in bookings from Americans, who can now travel to the UK with no need to isolate. “After last week’s rule change, bookings from the US went up by more than 150 per cent week-on-week,” he said. “New York to London bookings for August and September increased by 250 per cent. We expect a much bigger increase on UK to US routes when they reopen.”
The bellwether of the aviation market is Emirates, the biggest international carrier by passenger miles flown. Clark is so optimistic about growth that he is readying all 118 of his Airbus A380 superjumbos to return to service. “There’s so much wanderlust that, from November, sales graphs are going to go like a hockey stick in OECD countries,” he predicted.
Like most of the Gulf carriers, Emirates’ biggest challenges are India, the UK and Australia. Before the pandemic, the Dubai-based airline had 24 flights a day to India, 20 to Britain and 12 to Australia. Australia remains closed, India is all but, and the United Arab Emirates is on the UK’s list of red countries, which means arriving passengers have to quarantine in a hotel, deterring all but the most determined travellers.
Clark anticipates that the UAE will move on to the amber list shortly “because we have the highest vaccination rate in the world and the lowest death rate”. He hopes that when it becomes clear that air travel is resuming safely in much of the Western world, the pressure on Canberra to open its borders will ratchet up. “Don’t forget there’s a general election in Australia next May and many Australians are desperate to travel internationally,” he said. He added: “India is getting better.”
However, there are some clouds on the horizon. Harteveldt pointed out that while US air travel was back to 2019 levels, the overwhelming majority of passengers are leisure travellers. “Business travel domestically is 60 per cent down on 2019. It will be the same for some time and even lower internationally, about 80 per cent.” That matters because airlines make up to 80 per cent of profits from business travellers.
Advertisement
Paul Griffiths, the Briton who runs what pre-pandemic was the world’s busiest international hub, Dubai International, with 90 million passengers a year, agreed that “the golden days of profligate business travel are over, at least in the West”. He also worries that when the initial demand fades, rising unemployment, inflation and pressures on family budgets will mean travellers will be looking for value. “Carriers will have to discount premium seats to attract the well-heeled economy traveller to upgrade,” he said.
Deep-pocketed Qatar Airways and Turkish Airlines are already doing so, stealing market share from Emirates and Abu Dhabi-based Etihad. Dubai International has lost 21 per cent of global transfer traffic to Doha and Istanbul. Forward booking analysis suggests that Doha could steal Dubai’s crown to become the busiest airport in the Gulf. Griffiths insists Dubai still has more than double Doha’s traffic.
Getting strategy right is more important than ever because most airlines have either had to raise funds or received multibillion-pound government bailouts to survive. None expects to return to profit until at least next year. On Friday, BA’s owner, International Airlines Group, reported a €2.3 billion (£2 billion) pre-tax loss in the six months to the end of June on sales down 58 per cent at €2.2 billion.
The Grays do not care what airlines do or what their profits are as long as they carry on flying. The family is looking forward to their next trip. “We’ll be off for the California holiday we had to cancel twice as soon as we can,” said Kate.