Good evening,
A UK parliamentary report today hit out at “disproportionate” and “arbitrary” Covid-19 travel restrictions that had left air passengers confused and delivered a “severe financial shock” to the aviation sector.
As our Big Read explains, the last two years have seen the global industry battling for survival against flight bans and strict restrictions on passengers to control the spread of coronavirus. But after shedding thousands of jobs and diving into debt, airlines and airports are now struggling to handle the sudden surge in demand as restrictions are relaxed.
The number of scheduled flights is now at 89 per cent of 2019 levels, a jump from just a third a year ago, according to Financial Times analysis of data from consultancy Cirium. (You can see a visual presentation of the data here.)
Airlines are in a bullish mood after Easter, the first busy period for two years in many markets and a test for the upcoming summer holiday season. “The demand that we’ve seen over the last five weeks has been historic. We’ve never sold more tickets in any period in [our] public history . . . it’s been remarkable,” Delta chief Ed Bastian told the FT.
Recent earnings announcements have brought similarly good news. American Airlines, the US’s largest carrier, last week signalled an end to pandemic losses and a return to profitability in the second quarter as passenger demand surged. Smaller budget operations such as Wizz Air are also optimistic.
And although the rebound is mainly from leisure trips, there is renewed hope that business travel could stage a comeback. Travel spending by big US companies was “well over 50 per cent” of pre-pandemic levels in March, the chief financial officer of American Express told the FT last week. Delta said domestic corporate sales in March were 70 per cent of 2019 figures.
But while US airlines have been able to drop requirements for passengers to be masked after a legal challenge prevented authorities from implementing the rule, carriers in other countries are still chafing against restrictions. The head of Korean Air told the FT last week that it was “nonsense” for inbound passengers to still require a PCR test.
Staff shortages remain a big issue. There were 2.3mn fewer jobs in aviation compared with pre-pandemic levels, according to Oxford Economics, including a 29 per cent fall in contracted staff such as ground handlers. London Heathrow says it needs to recruit an extra 12,000 people to cope with summer demand. The UK’s busiest airport may be helped by a decision by government ministers to relax background checks for new employees.
And although airlines are making confident noises about new bookings, it is estimated that the global industry will still lose $11bn this year, taking overall net losses between 2020 and 2022 to $200bn.
Governments should have extended more support and airlines should have been less “short-sighted” when cutting staff, says Stephen Cotton, head of the International Transport Workers’ Federation. “Now it’s the workers who are left doing the jobs of two or three people and who are bearing the brunt of the frustration and anger of the passengers.”
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