SPECIAL REPORT: ROUTE DEVELOPMENT
Predicting the unpredictable
ASM Global Route Development’s senior vice president for consulting and product developoment, Nigel Mayes, considers the impact COVID-19 has had on route development.
T
he impact of COVID-19 on aviation is clear to see from the pictures of parked aircraft and empty airport terminals to the vacant beaches and closed hotels. But what has been the impact on airline and airport networks? What is recovery going to look like? And have we got any insights on the long-term impact of COVID-19? I shall attempt to address these issues in this article by offering some insight into the possible scenarios for the industry as we move forward.
Impact on airline-airport networks In 2020, global seat capacity fell to its lowest point in May when the number of seats available accounted for just 20% of 2019’s levels and, despite a number of false dawns, the trend is becoming one of a slow build-up of capacity, characterised by fluctuations caused by new outbreaks and borders closing and reopening. Currently global capacity is around 60% of what is was in June 2019, but there are regional variations that reflect where there are larger domestic markets, as well as differing border opening policies depending on transmission rates or vaccination rates. The Americas, for example, are showing a quicker return of capacity because of strong domestic markets, with the US in particular recovering in well in the last few months.
Global seat capacity by region The resilience of the airlines during the pandemic has been phenomenal. In the pursuit of conserving cash and finding some pockets of revenues, carriers have learnt to become more dynamic in their planning, making short-term decisions and experimenting with new markets.
14
AIRPORT WORLD/ISSUE 3, 2021
Since the start of the pandemic, globally, airlines launched more than 2,128 routes (ASM route database, 1st March 2020 to 28th February 2021). A significant proportion of these routes were launched by LCCs, with some carriers being more creative than others. Hungarian ULCC Wizz Air, for example, launched 252 services and accounted for 12% of the new routes. Carriers have focused on visiting friends and relatives (VFR) traffic and, sometimes, new country markets. TUIFly, for instance, launched services to Romania (Brussels to Suceavea), while Condor announced flights from Düsseldorf to Beirut and Sulaimaniyya, both targeting passenger flows that are still travelling for family reasons. This market will remain strong as people will want to connect to families quickly after the pandemic. Although full service carriers have launched fewer new routes, many have still been reactive by switching capacity to leisure markets and slashing frequency on business services. Lufthansa, for instance, launched a number of new leisure services to short-haul destinations in Greece, Spain, Tunisia, Egypt and Cyprus. While a number of US carriers have also started to operate to smaller, thinner markets targeting new leisure flows. In fact, American Airlines (AA) has launched over 150 new routes for Summer 2021 and many of these are aimed at smaller leisure market sectors. The return of business traffic is one of the biggest uncertainties, given its importance to airline revenues. ARC data from the USA shows business travel bookings are currently 72% down, while leisure bookings are down by 49%. According to CAPA, although business traffic may only account for 12% of airline passengers, it represents 20-30% of their revenues and sometimes higher. Lufthansa, for example, stated that corporate bookings accounted for 45% of its group revenue pre-pandemic.
