for 2021 in light of pandemic, Brexit, consumer confidence and workplace trends. Ian Taylor reports BUSINESS NEWS


‘Regional airports may need support to ensure survival’


Airports have been hit hard by pandemic restrictions on travel, but their importance to the UK regions means even smaller airports are unlikely to close. That is according to Deloitte


partner David Gard, who told the Travel Weekly Insight Report launch: “Airports have been hit very hard. They make a lot of revenue from passengers paying for car parks and retail as well as from travel and they’ve lost that. “But while many regional


airports have really struggled, they’re important for connectivity. The dilemma is whether they are going to get financial support to see them through Covid. “Some may require government


East


Midlands airport


Traveller confidence is critical to airlines’ recovery, says Gard


The extent of confidence among travellers will be key to how quickly leisure air traffic returns to more normal levels. That is the view of Deloitte partner


David Gard, who warned: “Airlines face a very substantial challenge.” He said: “We’ve had a substantial


support. Many are able to fund [operations] through capital programmes which are meant to be investing in runway extensions or new terminals or other capital expenditure which they are able to divert to operational costs to survive. “I’m of the view that, if


necessary, we’ll see some sort of bespoke support for regional airports to make sure they survive.”


decline in passenger volumes, approaching 80%, and a huge loss of revenue. If we don’t get decent international travel next summer, the challenge for many airlines will be to have sufficient cash to survive through to the spring of 2022.” Gard argued: “The attitude of


passengers, how quickly they want to come back, is going to be critical to the recovery for airlines. “Many surveys suggest passengers are particularly concerned about


Carriers face long-haul fall


A delayed return of corporate travel will pose serious problems for network airlines such as British Airways, but reconfigured aircraft and networks could boost the leisure sector. However, some long-haul routes


could be hit by a significant decline in business travellers. Deloitte partner David Gard


told a Travel Weekly Insight Report launch event: “We’re going to see a fundamental shift to lower-cost, shorter-haul travel which supports the leisure community because business travel will be less relevant.” Gard explained: “One upside of


Covid is that we’ve experienced new ways of working and some dynamics have fundamentally changed. Business travel will be one of those. We’ve found we can be effective on


travelweekly.co.uk How are Club


Class and First Class going to get footfall if there is much less business travel?


calls rather than having to travel. “There is also greater seriousness


about carbon emissions, so we have a fundamental challenge to the level of business travel. “Many network airlines rely on


front-of-the-bus flying for a key element of their revenue. But you can imagine less long-haul flying because it won’t make sense to have as much connectivity as pre-Covid. We’re just starting to work through what financial impact this could have on some of the big network carriers.”


Gard said: “Business and


first-class travel make a significant contribution, particularly long-haul travel. If you’re going to have much less business travel, you need to reconfigure aircraft to have greater density towards the back of the plane. “You could also rethink the size


of aircraft. We’re already seeing the retirement of [Boeing 747] jumbo jets. The Airbus A380 has probably taken a hit in terms of value and lease rates. “I see long-haul travel being


particularly impacted by loss of business, with less of an impact for shorter haul. In our business, if a flight is less than a certain number of hours you would not fly in business class anyway. I see an impact on long- haul. How are Club Class and First Class going to get footfall if there is much less business travel?”


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travel through airports and want to see how things work [before they travel], which suggests a six-month delay before we get decent travel [numbers]. “Despite the vaccine [news], all


the scenarios suggest aviation will not recover to pre-Covid levels until the end of 2023, if not into 2024. That is a substantial period of time.” He said: “Many airlines still have


a high fixed-cost base, primarily around the cost of aircraft. They’re going to have to address that. “Iata has suggested airlines


probably have to reduce their cost base by 40%. Furlough has helped, but they’re going to have to address the cost of aircraft and that is going to require some difficult conversations with lease holders.”


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Annual Report 2020-21


17 DECEMBER 2020


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