Airlines too pessimistic about air travel recovery: merged threads
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Airlines too pessimistic about air travel recovery: merged threads
Published on Thursday, May 28, 2020 (from travelmole)
EasyJet and other airlines are being too pessimistic about the recovery of air travel, according to industry analysts.
Data and analytics company GlobalData forecasts that international arrivals should reach 2019 as early as next year, not 2023 as airlines have predicted.
As easyJet announced plans to cut 30% of its workforce, John Vandesquille, GlobalData travel and tourism analyst, said: "With travel in Europe almost at a standstill, trimming costs is a necessity in the short term. However, easyJet's latest announcement stems from management's belief that travel demand will not return to pre-Covid levels until 2023.
"There is an element of risk here because demand could return sooner than that. According to GlobalData's forecasts, the number of international arrivals should reach 2019 levels as early as 2021.
"This can be seen as a slightly risky bet for the airline considering that consumer confidence is returning as the crisis is slowly coming to an end and that a potential 'travel itch' from Europeans following months of lockdown should not be ignored.
"Indeed, it will be essential for airlines, and even more particularly for those that are planning to be ready to fly for peak season like easyJet, to be fully operational as quickly as possible.
"The pandemic will deeply modify the way we see travel and people are expected to be more health conscious. Similarly, a post-Covid-19 economic recession is looming and it could have a significant impact on travel and tourism. But all this is unlikely to fully deter travellers.
"In a difficult economic context, low-cost airlines are the best equipped to make it out relatively safe. As such, easyJet can only hope that its decision to reduce its fleet and its workforce will not impede its recovery."
link
https://www.travelmole.com/news_feat...ews_id=2042853
Airlines too pessimistic about air travel recovery, says data specialist
EasyJet and other airlines are being too pessimistic about the recovery of air travel, according to industry analysts.
Data and analytics company GlobalData forecasts that international arrivals should reach 2019 as early as next year, not 2023 as airlines have predicted.
As easyJet announced plans to cut 30% of its workforce, John Vandesquille, GlobalData travel and tourism analyst, said: "With travel in Europe almost at a standstill, trimming costs is a necessity in the short term. However, easyJet's latest announcement stems from management's belief that travel demand will not return to pre-Covid levels until 2023.
"There is an element of risk here because demand could return sooner than that. According to GlobalData's forecasts, the number of international arrivals should reach 2019 levels as early as 2021.
"This can be seen as a slightly risky bet for the airline considering that consumer confidence is returning as the crisis is slowly coming to an end and that a potential 'travel itch' from Europeans following months of lockdown should not be ignored.
"Indeed, it will be essential for airlines, and even more particularly for those that are planning to be ready to fly for peak season like easyJet, to be fully operational as quickly as possible.
"The pandemic will deeply modify the way we see travel and people are expected to be more health conscious. Similarly, a post-Covid-19 economic recession is looming and it could have a significant impact on travel and tourism. But all this is unlikely to fully deter travellers.
"In a difficult economic context, low-cost airlines are the best equipped to make it out relatively safe. As such, easyJet can only hope that its decision to reduce its fleet and its workforce will not impede its recovery."
link
https://www.travelmole.com/news_feat...ews_id=2042853
Well of course consultants (or ‘specialists’) would talk it up for travel agents. They are not the ones with multi million dollar aircraft leases and all the other costs of running an airline to service.
The golden rule of consulting seems to be tell clients what they want to hear.
Easyjet et al would have their own experts telling them what to do, not what they would like to do.
The golden rule of consulting seems to be tell clients what they want to hear.
Easyjet et al would have their own experts telling them what to do, not what they would like to do.
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The concept of protective pessimism and erring on the safe side increases an airline's cash reserve margin, should the best-case scenario not materialize. Of course, we all hope that it will, but in case it doesn't, an extra safety net of saved cash and minimized overhead costs will improve the chance of riding it out. If there's a sustained positive trend throughout Q3 and Q4 of 2020, airlines won't be too challenged to ramp up capacity for 2021. Lots of available aircraft, lots of unemployed personnel, lots of vacant slots available these days. Whenever demand picks up whoever's still in business and has solid cash reserves will be quick to benefit from it. But, to fulfill the latter two conditions, a conservative approach while uncertainty is still great helps a lot.
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Out of interest what is the data stream that is predicting it taking until 2023 for traffic to recover to 2019 levels?
How are Airlines projecting 40%, 60% etc traffic levels in 2021?
That article may be bang on, it could be incredibly wide of the mark... Right now it is completely unknown! There has been no global situation like this before.
Airlines may be over pessimistic right now, which is understandable with little or no revenue for the past 12 weeks... You certainly could argue a late summer bounce back may be on the cards in certain sectors ( IF Governments get their acts together and work on sensible solutions ).
How are Airlines projecting 40%, 60% etc traffic levels in 2021?
That article may be bang on, it could be incredibly wide of the mark... Right now it is completely unknown! There has been no global situation like this before.
Airlines may be over pessimistic right now, which is understandable with little or no revenue for the past 12 weeks... You certainly could argue a late summer bounce back may be on the cards in certain sectors ( IF Governments get their acts together and work on sensible solutions ).
One thing is certain, by the end of next year we will know how accurate this report is :-) How anyone thinks they can predict the outcome of this mess is beyond me. I have mates in businesses as diverse as bed sales, spa pool sales and building who say they have never been busier and lots of friends who are out of work. Some economic indicators are in the toilet whilst other ps are looking stronger than expected...... no body knows. As one economist said on the radio today, ‘the degree of the fall doesn’t really matter, we are interested in the rate of recovery’ he openly admitted this is something we can’t predict as we have never seen anything like this, he said the worlds top economists are saying anything from 2 years to 10 years + for a recovery to pre coved levels. Hope for the best and plan for the worst I say.
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Also, the generalization "airlines" begs the question "Which airlines, and where about in the world?" since some areas and types of operations clearly have a somewhat better outlook than others. In Europe, things are slowly tip-toeing towards normality (touch wood). In the USA, there are some positive signs as well. In South America though, the situation is likely to get worse before it gets better. Due to the very nature of easing the restrictions on a regional and continental level before going transcontinental, short-haul will certainly recover before long-haul. Also, it's likely that low-cost carriers will recover before legacy ones since in times of recession people will be looking for the cheapest solutions possible, with comfort and status somewhat lower on the priority list. So, a forecast that may be applicable to a European low-cost carrier will prove totally irrelevant to a legacy carrier in Southeast Asia.
The recovery is going to be Patchy”. The long and short answers involve expense and risk. There are going to be few travel bargains and International travel insurance covering Covid19 is unavailable.
EasyJet and other airlines are being too pessimistic about the recovery of air travel, according to industry analysts.
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I've been following Air NZs chief revenue officer over the last week. in the last week he posted that forward bookings have been better than anticipated on the domestic network.
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You can talk about 'airline' recovery as much as you like but there is a need to reflect upon;
- The ongoing effect of Covid-19, which is with us forever in some form or another, airline charges may well increase....
- The individuals personal financial position; discretionary spending has been severely impacted, people with less resources than before will not be traveling. It can take years to recover personal financial loss.
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the negativity in a pilot forum is unbelievable.
You should all be talking it up as much as possible, like real estate industry. Do you want to go back to work full time or not ?
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You can talk about 'airline' recovery as much as you like but there is a need to reflect upon;
- The ongoing effect of Covid-19, which is with us forever in some form or another, airline charges may well increase....
- The individuals personal financial position; discretionary spending has been severely impacted, people with less resources than before will not be traveling. It can take years to recover personal financial loss.
Most of the media focuses on negativity & beats stories up.
Maybe we should all stop reading/watching the daily news.
The following might as well be on news …
BREAKING NEWS
Three thousand deaths in Brisbane overnight.
A person is central Brisbane sprayed an ants news with insecticide last night & killed an estimate 3000 ants.
Everyone should be talking about when they will be flying, not talking about corona.
I’ve even heard people on jobkeeper & jobseeker talking about their next holiday soon. Sure, they might be talking about cheaper holidays, but we can all see that airlines are putting out thousands of very cheap airfares right now for the next 11 months.
I've been following Air NZs chief revenue officer over the last week. in the last week he posted that forward bookings have been better than anticipated on the domestic network
I've noticed that COVID - 19 is slipping from top spot in the news, it's still in the headlines but Hong Kong and the police killing in America were featured ahead of it when I turned on the TV.
N4790P
They have spent money on better facilities etc to use the technology. And the other cool tech do-dads like impressive Zoom backdrops.
on edit: July bookings are apparently running ahead of the very low expectations, but a long way yet from the 40% model.
As far as talking up travel...the market will have plenty of pent-up demand which will be tempered only by personal budgets and price. I don’t like travel much anymore, but after isolation I am itching to go somewhere first chance I get. And so is everyone that I have spoken to lately.
on edit: July bookings are apparently running ahead of the very low expectations, but a long way yet from the 40% model.
As far as talking up travel...the market will have plenty of pent-up demand which will be tempered only by personal budgets and price. I don’t like travel much anymore, but after isolation I am itching to go somewhere first chance I get. And so is everyone that I have spoken to lately.
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Holiday flights and many other routes at ezy Uk bases are close to full or sold out this August according to their website. Lots of government cash swilling around in middle-low income families. Google trends searches are upward. 2021 is going to be a mass exodus. The problem is The UK government don't seem to want this to happen. There seems to be some kind will to roll back aviation somewhat.
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Travel giants soar on hopes for industry still on its knees
someone could be cynical & suggest that donors to political parties, have some inside info on when borders will actually open.
Also heard today, that international airfares for Xmas period are increasing, which says something, either seats are selling or airlines know countries are opening their borders.
You'd think all airlines would be harrassing their countries leaders everyday to get the borders open.
https://inqld.com.au/business/2020/0...-on-its-knees/
Brisbane’s travel duo Flight Centre and Corporate Travel Management are defying gravity with share prices rising steeply on the back of renewed hope for the tourism market.
Flight Centre, which raised $700 million earlier this year just to stay alive, rose 13 per cent on Tuesday alone to $17.52, which is a 96 per cent rise on its March 19 low of $8.92.
Corporate Travel Management closed on Tuesday at $14.92, a rise of 202 per cent from its March low of $4.70.
However, the shares of both companies are still well below the prices before the pandemic hit.
The Australian tourism market may face a much-reduced market when international borders do re-open because of China’s statements that its citizens should be wary of travel to Australia because of an alleged increase in racist attacks.
The overall market is also booming. The ASX 200 closed at 6144 on Tuesday, although it was expected to fall back today after a sell-off overnight in the US.
It has climbed 38 per cent since its March lows and is now 14 per cent below its high in February and added $464 billion to its value since the March lows, but it is still $267 billion short of the February peak.
The Australian dollar is also hovering around the US70 cent mark on the back of higher iron ore prices which has also boosted stocks like BHP and Rio Tinto.
Also heard today, that international airfares for Xmas period are increasing, which says something, either seats are selling or airlines know countries are opening their borders.
You'd think all airlines would be harrassing their countries leaders everyday to get the borders open.
https://inqld.com.au/business/2020/0...-on-its-knees/
Defying gravity: Travel giants soar on hopes for industry still on its knees
Business
Brisbane’s travel duo Flight Centre and Corporate Travel Management are defying gravity with share prices rising steeply on the back of renewed hope for the tourism market.
Flight Centre, which raised $700 million earlier this year just to stay alive, rose 13 per cent on Tuesday alone to $17.52, which is a 96 per cent rise on its March 19 low of $8.92.
Corporate Travel Management closed on Tuesday at $14.92, a rise of 202 per cent from its March low of $4.70.
However, the shares of both companies are still well below the prices before the pandemic hit.
The Australian tourism market may face a much-reduced market when international borders do re-open because of China’s statements that its citizens should be wary of travel to Australia because of an alleged increase in racist attacks.
The overall market is also booming. The ASX 200 closed at 6144 on Tuesday, although it was expected to fall back today after a sell-off overnight in the US.
It has climbed 38 per cent since its March lows and is now 14 per cent below its high in February and added $464 billion to its value since the March lows, but it is still $267 billion short of the February peak.
The Australian dollar is also hovering around the US70 cent mark on the back of higher iron ore prices which has also boosted stocks like BHP and Rio Tinto.
