Why Airfares Will Get Cheaper In 2021 Earlier than They Rocket Sky Excessive
Airlines are expected to rebound in mid-2021 and seats will get cheaper before they get more … [+]
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The aviation industry had an entire decade of sustained profitability until Covid-19 hit in 2020. Many planes remained on the ground and airlines stalled, many flying cargo to stay afloat.
It will be hard to imagine that an industry that carries passengers on the equivalent of 208 million trips around the world can return to pre-pandemic levels. Recovery will obviously depend on vaccinations, government travel decisions, and people’s desire to travel again.
However, it is likely that airlines will lower seat prices. However, basic economics means that due to the expected reduction in business travel, airlines may need to charge more to stay alive.
Airlines have started cutting prices and providing incentives
Many airlines are desperately trying to encourage vacationers to return to the airplane. In Europe, Ryanair has brought prices as low as € 9.99 ($ 12.33), and Bloomberg said many airlines are considering other incentives like free travel insurance and 2-for-1 hotel and flight deals. Others, like China Eastern Airlines, offer passports that allow users to fly an unlimited number of flights for one price (similar to a bus pass).
Many industry professionals expect the long-awaited upswing in leisure and family travel to hit most regions of the world by mid-2021. From this point on, recovery can begin.
Premium seats have kept airlines afloat in the past and generated up to 75% of sales
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A drop in business travel will kill airlines
There is no doubt that after almost a year more working from home, businesses understand that they can function without anyone traveling to meetings or conferences. it will save you a tremendous amount of business costs. This means that business aviation will decline sharply.
The Wall Street Journal predicted that post-pandemic business travel will decrease 37% from pre-pandemic levels. Bill Gates, quoted on CNBC, predicted an even higher drop of 50%, saying, “The coronavirus will fundamentally change the way people travel and do business, even after the pandemic is over.”
Jay Sorensen, president of IdeaWorks – an aviation consultancy firm – believes the ramifications will continue across the industry. “Brick and mortar retail has been destroyed by e-commerce, and I think this is a parallel story,” said Sorensen.
While business travelers make up only 10% of travelers, they bring in between 55 and 75% of the airline’s revenue as they book the premium seats, often at the last minute, as reported by the New York Times.
And it’s not just airlines that have lost. In 2020, the entire business travel industry, consisting of airlines, rental car companies, hotels, etc., lost nearly $ 1 trillion, according to data from the Global Business Travel Association, a trading group with around 9,000 members, according to data from Axios. Millions of people have lost their jobs.
Even if companies decide to send employees around the world, they cannot do so until they can make sure they are protecting their health. It can take years for the sector to recover.
Vacationers lose out on higher ticket prices and less choice of routes, airlines and airlines … [+]
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This will have a negative impact on leisure flights
Don’t make a mistake; The shortage of business travelers will drastically limit the options for leisure travelers.
The choice of airlines will be reduced as airlines continue to collapse and go broke as many did in 2020 – and some of the larger airlines will aim to target smaller businesses straight to buyout options, Bloomberg said. The German Lufthanza is already planning flights to sunny island destinations such as Corfu and Zanzibar, which are currently covered by the specialist company Condor.
The choice of targets will be drastically reduced. For example, British Airways is permanently removing 13 long-haul destinations in North America, the Middle East, South Africa and Asia from its schedule and Cathay Pacific is stopping flights to seven global locations to contain losses.
Airlines will reduce the size of the aircraft, the number of routes and the frequency of flights.
Ultimately, when airlines are no longer subsidized by business travelers, airlines have no choice but to raise airfare for leisure travelers.