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Coordinated govt policies critical to air travel recoveryon

Travel experts have demanded that coordinated government policies remain critical to air travel recovery, adding that a COVID-resilient mindset must rise above COVID-free.

 

They equally stated that blanket travel bans do not prevent spread and quarantines for the asymptomatic vaccinated which they described as ‘an unnecessary burden.’

 

A former Assistant Secretary-General of Airline Operators of Nigeria (AON), Muhammed Tukur, noted that testing keeps travelers with symptoms away from airplanes but constantly changing policies must be avoided to prevent confusion and needless turmoil.

 

He reiterated that continued gradual recovery is expected in  2022, varied region-by-region, stressing that each wave of infections results in a smaller impact on air travel demand.

 

As immunity increases, he reiterated that isolation periods are shrinking and cross-border testing requirements are being reduced despite Omicron’s impact on case numbers.

He said: “The Americas and Europe are poised to rebound once Omicron subsides. Border restrictions rather than vaccine supply will constrain Asia Pacific’s recovery with a China reopening unlocking 40% of international traffic in the region. Just as domestic traffic bounced back in 2021, international flows will reawaken in 2022.

“A structural shift in air cargo has occurred, driven by the pull-forward of e-commerce growth, airlines’ desire to diversify revenue sources, and the need to restart supply chains. Freight tonne kilometers (FTKs) flown are now 9% ahead of 2019-levels with historically high yields.

“Airlines are going freight-forward. Since 2019, there has been a 50% increase in the number of passenger airlines that operate two or more dedicated freighters including diverse business models such as Air Canada, SmartLynx, and SpiceJet. E-commerce revenues are expected to grow $2 trillion by 2025, more than 50% over 2021. Airlines are scrambling to collect their share.”

Cash-starved airlines have developed creative financing structures realising they have more collateral than initially thought.

Over $28 billion of publicly traded debt is now secured by routes, slots, gates, and loyalty programs. Active balance sheet management and refinancing of expensive debt stacks will be the priority in 2022.

Continued shareholder and government support, they argue, will be critical to airlines that have not yet benefited from revenue recovery.

An airline operator, who pleaded anonymity, told New Telegraph that competitive dynamics had been reshuffled, stressing that while only fifteen or so airlines failed globally in 2021, the airlines providing the most capacity have changed in a quarter of countries.

It would be recalled that more than 25 per cent of airlines operating in the fourth quarter of 2021 flew more capacity than they did in 2019.

The first two years of the pandemic were marked by  he mergers that did not happen (e.g. Air Canada and Air Transat, IAG, and Air Europa) and the start-ups that got off the ground (e.g. Breeze, SuperAir, Starlux).

With clarity building on who are the winners and losers, expect to see airline consolidation pick-up in 2022.

He further stated that well-positioned airlines used the pandemic as a set-up for the next five years, arguing that restructured costs, renewed fleets, and expanded networks would create a competitive advantage as demand returns.

Network carriers are leveraging cooperation to expand route coverage and reduce unprofitable flying while low-cost carriers are aggressively filling market gaps.

 

Corporate travel has been seriously hit by the pandemic but there is room for optimism. Forecasts call for a bounce back to around two-thirds of pre-pandemic levels by the end of 2022.

While not enough to limit day-of-week and seasonal variations in demand, airlines are being nimble in their product offerings with yields for premium leisure outperforming economy classes.

Rebounding conference attendance in the second half of 2021 and a busy calendar in 2022 demonstrate the strong desire to renew relationships and get back to doing business face-to-face.

 

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