Asia Business Channel

Airfares could rise by 50% if social distancing leads to empty middle seats

Hong Kong International Airport’s departure hall appears deserted amid the coronavirus pandemic / Photo - Sam Tsang

 

“Airlines could increase fares by 54% in Asia-Pacific if flight capacity is capped under social distancing rules and talks between governments and aviation bodies are under way to see what standardized rules could be adopted to protect public health in a post-Covid-19 era”

Travellers should brace for higher air ticket prices if carriers are expected to maintain social distancing measures on flights to reduce chances of Covid-19 infection, with airlines warning that recovery from the pandemic could be severely jeopardised if middle seats are left empty.

The International Air Transport Association (IATA) said airfares could soar by 54% for travellers in Asia-Pacific, the highest worldwide, as airlines would be operating at nearly 40% lower capacity if the middle seats were eliminated.

Brian Pearce, IATA’s chief economist, said during a teleconference that, “[By] removing the middle seats, [the] cost of providing services is higher, eventually airlines will have to reflect that in fares to have viable operations.”

IATA, which represents some 290 airlines accounting for 82% of global air traffic, said that more than on-board social distancing, thorough and frequent cabin sanitisation, making passengers wear masks on flights and implementing other health and safety measures at airports would reduce the risk of coronavirus transmission among travellers.

 

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Parked aeroplanes at Hong Kong International Airport / Photo by Robert Ng. SCMP


Discussions among governments and aviation bodies are under way to see what standardized rules could be adopted to protect public health in a post-Covid-19 era. If more social distancing is to be enforced, “cheap travel is over”, Alexandre de Juniac, IATA’s director general and CEO, said.

Airlines would have to increase prices as only four airlines out of 122 surveyed by IATA could break even at load factors below 62%, with the other 118 carriers being loss-making.

There has been some resistance from within the industry to the “middle seat” proposal. Ryanair, Europe’s biggest budget carrier, has said that it will not resume services if the requirement is imposed.

Meanwhile in China, where travel restrictions have been eased as the outbreak has been brought under control, Trip.com reports that airfares on some domestic routes saw significant increases during the Labour Day holiday in the first week of May compared with the Ching Ming Festival holiday in April. Still, Trip.com says that overall, airfares were 32% lower compared to the year-earlier period.

China’s largest online booking platform said that on April 29, airline ticket prices from Beijing to Hangzhou jumped by more than 700% within half an hour after the Beijing government lowered the city’s public health warning level imposed in the wake of the coronavirus outbreak, while overall flight bookings from the Chinese capital surged by 1,500% immediately after the announcement.

Professor Qi Qi, of the Guangzhou Civil Aviation College, said in a media interview that China’s domestic airfares will continue to gradually rise, but that the increases would be controlled because of strict government regulation.

IATA noted that low airfares will help stimulate demand when travel restrictions are eased, but will eventually rise as they are not sustainable in the long term when most airlines have encountered huge losses and need to make up for their deficits.

The transition from a low-fare environment to a significantly higher pricing will be a delicate dilemma for airlines, which are in their largest crisis in history as demand plunged by 96% because of travel restrictions.

Australia’s Qantas said cheap airfares were coming to stimulate demand as the airline resumes flying in July. CEO Alan Joyce suggested flights between Melbourne and Sydney, one of the world’s busiest domestic routes, could fall to HK$95 from around HK$195. Similarly, Ryanair has also flagged “significant price discounting” as a means to lure back travellers.

In the United States, the major airlines – American, Delta and United are all looking at drastic cost cutting measures that will include early retirement of older, less efficient aircraft, decreases in staff that include management, pilots, flight attendants, and airport staff – with estimates being that 50% of jobs will be but by the end of 2020.

 

 

 

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